This paper establishes the Equality of Wealth Creation principle within the Natural Economic Wealth (NEW) framework: any algorithmic execution satisfying Axioms 1, 2, and 3 of Paper 0 constitutes wealth creation and is recorded in the distributed ledger with full Qoin attribution, regardless of whether it is recognised, monetised, or valued by any existing economic system. The restriction that orthodox economics imposes requiring financial mediation as a precondition for economic recognition has no physical basis. It is an institutional convention, and Axiom 1 dissolves it by measuring what physically occurs rather than what the financial system records.
The persistence of global financial instability, sovereign debt fragility, inflationary volatility, and asymmetric currency dependence has intensified scholarly debate regarding the structural limitations of centralized fiat-monetary regimes. This study advances a theoretically grounded and institutionally operational Monetary Plurality Framework designed to enhance systemic resilience through diversified currency architecture, asset-anchored valuation, and hybrid governance integration. Drawing upon interdisciplinary monetary theory, comparative institutional analysis, and resilience economics, the research develops a multi-tier monetary ecosystem combining centralized macro-stability with decentralized micro-adaptability enabled by distributed ledger technologies. The findings suggest that monetary diversification reduces crisis transmission, strengthens domestic productive linkage, and improves long-term financial sovereignty. The study contributes to the literature by synthesizing complementary currency theory, asset-backed monetary design, and digital governance economics into a unified resilience-oriented model suitable for volatile global conditions.
Private agents do not internalize the impact of their investment decisions on the sovereign’s bond prices and default risk. Therefore, a standard externality argument implies that investment is insufficient and that a subsidy can improve welfare, if financed by non-distortionary means. We contrast this logic with a countervailing force. When the sovereign is impatient relative to households, plausibly due to political economy factors, it finds laissez-faire capital accumulation excessive and might prefer instead to tax it. We embed both mechanisms in a sovereign default model with decentralized capital investment, long-term public debt, and stochastic trend growth, calibrated to salient features of the Spanish economy. We find that the impatience channel dominates quantitatively, to such an extent that laissez-faire is preferable to the government’s ideal fiscal policy, based on households’ welfare.
Official lending is large, senior, and countercyclical, continuing after sovereigns fall into arrears on private debt. We ask why sovereign finance exhibits this division of labor across creditors. In a production economy where a risk-averse sovereign privately allocates imported inputs, commitment is limited on both sides, and monitoring generates a noisy signal, the constrained-optimal allocation is decentralized by defaultable private debt, senior nondefaultable multilateral debt, and concessional bilateral debt whose relief is tied to the signal. Production remains distorted, but the sovereign is never excluded: official lending is monitored liquidity provision. A calibration reproduces procyclical private and countercyclical official debt.
Financial institutions today are embedded in a multiplex network of interconnected obligations spanning interbank lending, sovereign bond exposures, and decentralized finance liquidity pools. Traditional systemic risk metrics treat each channel independently, ignoring the cross-layer feedback mechanisms through which shocks amplify during crises. We introduce the Multiplex Interdependence Centrality framework, a spectral measure that computes the principal eigenvector of a weighted supra-adjacency matrix coupling multiple financial layers. The multiplex interdependence centrality score captures a node's systemic importance jointly across all layers, accounting for both intra-layer exposure weights and inter-layer coupling intensities. We couple this centrality measure with a threshold-based cascade simulation to validate its predictive power. Using a synthetic three-layer financial network of 100 nodes representing interbank lending, sovereign bonds, and DeFi markets, we demonstrate that MIC achieves a Pearson correlation of r = 0.806 with actual cascade damage that substantially outperforms the centrality of the eigenvector of the single-layer, PageRank, and the centrality of the differences. Our results provide a rigorous quantitative foundation for integrating multiplex network metrics into institutional risk monitoring, central bank stress-testing frameworks, and regulatory oversight of cross-sector financial contagion.
This note examines the role of 'tokenization' of monetary deposits-holding them on programmable, decentralized ledgers-in achieving automated, real-time processing of financial transactions. It compares this with the alternative of automated processing on conventional account-based centralized ledgers. It finds that the only use case which require such 'tokenized' monetary deposits are in realtime pre-funded financial trading of financial assets (along the same lines as the prefunded trading in decentralized finance). Here the 'tokenized' deposits must be 100% reserved to support settlement between institutions. All other use cases can be equally well supported using conventional account-based centralized ledgers. Programmability and automation can be equally well implemented with either architecture. For most use cases (the principal exception is global corporate cash management) the incentives for adoption are likely to be stronger with conventional centralized rather than decentralized architecture. JEL codes: E42, G21, G23, O33
This study investigates Granger-causality relationships between crypto-assets (Bitcoin and Ethereum) and traditional financial assets (stock indices and exchange rates) in BRICS-T countries over the 2016–2024 period. The findings highlight significant interlinkages: bidirectional causality exists between Bitcoin and Russia's stock market, and between Ethereum and both Brazil's stock market and the USD/INR exchange rate. Unidirectional causality is observed from Bitcoin to the stock markets of Brazil, India, and China, while the USD/TRY exchange rate influences Bitcoin. Similarly, Ethereum affects the stock markets of Russia, India, and South Africa, while the USD/TRY exchange rate also Granger-causes Ethereum. These results indicate a growing synchronization between crypto-assets and conventional financial markets. The presence of both unidirectional and bidirectional causalities emphasizes the increasing integration of global financial systems and highlights the importance for investors to consider cross-market interactions when making decisions. Crypto-assets are no longer isolated but are embedded in broader financial dynamics.
Olawale C. Olawore, Taiwo R. Aiki, Oluwatobi J. Banjo, Victor O. Okoh · 5 authors
The global financial system is now undergoing considerable instability, raising critical issues about the durability of reserve currencies. This research examines the probability of the euro surpassing the United States dollar as the predominant reserve currency, particularly in the context of heightened economic volatility and the emergence of new rivals, such as the Chinese yuan, striving for more significance in the global market. The research specifically examines the possibility of the euro surpassing the United States dollar. This research employs a mixed-methods approach to evaluate the competitiveness, credibility, and limitations of predominant reserve currencies. It does this by integrating actual reserve data from the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) with theoretical concepts derived from dominant stability theory, network effects, and institutional trust. The data indicates that the dollar's supremacy has been progressively declining, from over 70% of global reserves in 2000 to around 58% by mid-2024. Robust legal frameworks, monetary credibility, and comprehensive financial markets collectively enhance the prosperity of the euro, which constitutes almost twenty. (20%,) percent of the total. The Eurozone, meanwhile, persists in facing challenges such as the lack of a fiscal union and the disunity of political leadership within the bloc. The Chinese yuan accounts for only four (4%) percent of world foreign currency reserves, notwithstanding programs like the Belt and Road and enhanced central bank swap lines promoting its utilization. China's persistent objective of sustaining a depreciated yuan to bolster its international economic competitiveness presents a considerable obstacle. Because the yuan cannot be converted into other currencies and there is uncertainty over its value over the long term, foreign central banks are unable to maintain considerable reserves of the yuan. The continued existence of concerns over capital restrictions, decreased financial transparency, and political participation has led to widespread pessimism regarding the yuan's potential to continue functioning as a reserve currency despite these factors. Based on what the study found, it seems unlikely that there will ever be a single currency that is the most important one in the world. This suggests that there is a multipolar system in which the euro, the yuan, and digital currencies like the e-CNY and the digital euro all function together in a framework for international monetary policy that is becoming more decentralized and strategically split. These changes have big effects that might change not just how the world is run, but also the trade strategy and macroeconomic policy that are already in place. These changes also make life harder for civilizations that are in other regions of the planet.
This study investigates the dynamic interplay between national currencies of the core BRICS economies and the three strongest monetary assets (US dollar, gold, Bitcoin) in the existing global financial outlook. Using data spanning the inflationary Russia-Ukraine conflict (24 February 2022 to 5 June 2025) and the innovative Quantile-VAR methodology in bear, normal and bull market conditions as expressed by quantiles insights are offered about the potential of transformation of the monetary status quo. Findings reveal that extreme market conditions strengthen the leading potential of Bitcoin and gold in early and later war phases, respectively. This abides by the pseudo-wealth and consumption fluctuations theory of Guzman and Stiglitz (2021) as higher risk-taking appears in turbulent periods for preserving and promoting growth. Shielding from inflation could also work this way. The Brazilian, Chinese and South African currencies gain prominence while the Russian currency acts as a net absorber of shocks. So the US dollar could be partly crowded out. Alterations in monetary asset allocation for investors could serve for better adapting to contemporary financial needs.
The accelerating geopolitical rivalry between major powers has renewed interest in diversifying central bank reserves. Traditionally dominated by the US dollar and gold, global reserve composition is now being reconsidered amid de-dollarization trends and the growing relevance of crypto assets – particularly Bitcoin. This study examines the rationale, risks, and strategic implications of incorporating Bitcoin into sovereign reserve portfolios, with a focus on the financial confrontation between the United States (US) and the People’s Republic of China (China).Adopting an interdisciplinary approach, the paper integrates macroeconomic, legal, and geopolitical analysis. It explores the United States’ gradual institutional accommodation of Bitcoin, culminating in the 2025 establishment of a Strategic Bitcoin Reserve, contrasted with China’s prohibitive stance and promotion of the centralized digital yuan (e-CNY). The study further analyzes the legal instruments, regulatory strategies, and infrastructural controls through which the US exerts influence over crypto markets, including indirect market interventions and custodial frameworks.Findings indicate that, despite high volatility and limited adoption, Bitcoin is increasingly perceived as a strategic hedge by states seeking to reduce dependence on traditional financial hegemony. While its formal inclusion in reserves remains marginal and politically constrained, its symbolic and geopolitical utility is growing – particularly for sanctioned or financially isolated economies.The article concludes that Bitcoin’s role in global finance may expand under specific conditions: market stabilization, regulatory convergence, and persistent geopolitical fragmentation. To support structured evaluation, the paper introduces two novel analytical concepts – the Sovereign Crypto Reserve Readiness Index (SCRRI) and the Bitcoin Reserve Exposure Threshold (BRET), which together provide a framework for assessing both institutional feasibility and risk-adjusted limits for sovereign Bitcoin integration.
Stablecoins represent a rapidly growing segment of the cryptocurrency market, aiming to overcome the high volatility of cryptocurrencies. Their primary goal is maintaining a stable value, usually pegged to fiat currencies (e.g., the US dollar), which facilitates their use in international payments, as assets within decentralized finance (DeFi), and as protection against inflation. This article explores blockchain technology, the development of stablecoins, methods of ensuring stability, and the reasons for their popularity among users. Special emphasis is placed on regulation at both the EU and US levels, evaluating the compliance of the most widely used stablecoins within legal frameworks. This research investigates advantages and risks, including their use in criminal activities, legal ambiguities, and potential instability. Quantitative and qualitative methods were utilized, including analysis of market capitalization, stability assurance mechanisms, and regulatory policies. Findings reveal that investors trust stablecoins backed by fiat currency reserves (particularly USD) the most, with Tether (USDT) holding the largest market share, despite its lack of full legislative compliance. The article highlights the key challenges and opportunities stablecoins present to individuals and financial markets.
ABSTRACT The article argues that the European Central Bank's (ECB) regulatory stance toward cryptocurrencies was underpinned by efforts to preserve legitimacy and monetary sovereignty. Triangulating a content analysis on the ECB's policy statements on cryptocurrencies, examination of European macroeconomic data, and price dynamic analysis of Bitcoin from 2014 to 2025, this article traces an evolution in the ECB's regulatory stance toward cryptocurrencies through two phases that inadvertently abetted cryptocurrency adoption: neutralization (2018–2019) and cooptation (2020‐present). From 2018 to 2019, the ECB assumed a hostile stance toward cryptocurrencies, attempting to neutralize its influence. However, its market‐oriented approach to regulation created a lack of controls over cryptocurrencies and a deregulation of payment processing that enabled their expansion. By 2020, the ECB shifted toward tolerance and even cooptation when unsuccessful policy attempts to contain economic precarity amid the pandemic subsequently incentivized household adoption of cryptocurrencies which, still unregulated, gained notoriety as a prospective alternative source of income. During this period, the shift to digital payments, global isomorphic pressures from the SEC's history with cryptocurrencies, and global currency competition against the Euro energized the ECB's aspirations for a digital Euro, for which it sought to coopt cryptocurrency stablecoin designs and popularity to secure public legitimacy.
This paper examines how gold and Bitcoin have changed in terms of value and function in the context of the central banking system in the 21st century. Over the past decades, central banks have held gold as one of their primary reserve assets, given its stability, relative rarity, and traditional status as an inflation hedge and financial crisis buffer. However, with the advent of Bitcoin, central banks now have the opportunity to hold a new asset, one that has been compared to “digital gold”. On one hand, Bitcoin revolutionizes the monetary system because it is decentralized, has built in scarcity, and serves as a store of value. However, on the other hand, Bitcoin has traditionally been highly volatile, suffered from regulatory issues, and possesses a relatively short history; all of which hinder Bitcoin from becoming more accepted among central banks. Factors are discussed that affect central bank reserve management: the enduring role of gold, Bitcoin as an additional reserve, and the growing significance of central bank digital currencies. It is argued that while it remains unclear whether central banks will fully integrate Bitcoin into current reserves, its acceptance thus far may impact the decision of global monetary systems regarding incorporating digital technologies alongside more conventional assets, such as gold.
Abstract This paper examines the dynamic interplay between the global geopolitical risk and eleven decentralized finance (DeFi) digital currencies during the inflationary burden caused by the Russia-Ukraine war episodes. Daily data spanning from 13 October 2021 to 29 October 2024 and the innovative Quantile-Vector Autoregressive (Q-VAR) methodology are employed for estimating the pairwise, joint and network linkages at the lower, middle and upper quantiles. High levels of geopolitical risk are more connected with bull markets of the DeFi assets and new war episodes strengthen this relation. Geopolitical tensions combined with high inflation lead to the GPR becoming major determinant of DeFi markets so contributing to the transition to the digital decentralized cashless financial system. Maker is the leading DeFi asset in this transition and constitutes a promising successor of fiat currencies that suffer from devaluation generated by conflicts.