In the context of the “dual carbon” strategy, how to leverage green finance to promote China's wind power industry is a hot topic. Unlike existing literature, this article uses a nonparametric additive model to investigate the impact and mechanism of green finance on wind power development. Research has found that green finance has an inverted U-shaped nonlinear impact on wind power development, indicating that green finance has a more prominent contribution to the wind power industry in the early stages. Further mechanism research indicates that green finance affects the wind power industry through foreign direct investment and green technology innovation. Specifically, with the relaxation of foreign direct investment conditions in the energy sector, the role of foreign direct investment in promoting the wind power industry more prominent in the later stages. In the early stages, government support was greater, and green technology patents grew rapidly, driving green technology innovation to have a more significant impact on the wind power industry. In addition, the impact of fiscal decentralization, wind power prices, and environmental regulations on the wind power industry also exhibits significant nonlinear characteristics. This article helps to comprehensively understand the mechanism and impact of green finance on wind power development, and provides a reliable basis for optimizing green finance policy and effectively promoting wind power.
Innovative financial services may help to reduce global carbon emissions. We examine the activity in trading of voluntary carbon credits on a new blockchain-based exchange, which reduces the amount of intermediation in this market. Over the years 2021 and 2022, about 3.8 million tCO2e tokens have been tokenized on the carbon token exchange, of which about 2.8 million tCO2e tokens have been burned, leaving 1.0 million tCO2 tokens available for purchase on the exchange. Over these two years, the total secondary market trading turnover has been $ 21.2 million. Trading liquidity is limited to only a few types of carbon credit tokens. The prices of these most liquid tokens move in line with prices of similar carbon projects available for purchase elsewhere.
This paper provides a systematic analysis of the financial attributes of non-fungible tokens. The study synthesizes the theme and author characteristics of 48 empirical studies published in JCR-listed journals or shared in the SSRN repository from 2021 to 2023. This paper constructs NFTs as a digital investment system within the framework of systems theory. The composition of this system includes NFT assets, markets, investors, and regulations. The financial attributes of NFTs, such as pricing, return, and risks, interact with the segments of this system. This framework reveals the current progress in the research on NFTs as a digital investment. There is a high degree of heterogeneity among studies that examine this empirical phenomenon. Additionally, the bibliometric analysis reveals that this new area of study possesses unique characteristics in terms of publications, author identity, journals, analytical methods, and other relevant factors. Based on the analysis and review, potential areas for future research are identified and practical implications are discussed from the investor, regulator, and market participant perspectives.
The convergence of Decentralized Finance (DeFi) and Artificial Intelligence (AI) represents a transformative development in the financial industry, offering the potential to revolutionize traditional financial services and create new, innovative solutions. This research paper explores the synergies, opportunities, and challenges arising from the integration of AI technologies into DeFi platforms. By leveraging the decentralized, transparent, and secure nature of blockchain technology and the data-driven, intelligent capabilities of AI, DeFi-AI solutions can enable more efficient, accessible, and personalized financial services. The paper discusses various AI-powered DeFi applications, such as automated market makers, AI-driven lending and credit scoring, intelligent yield farming strategies, and AI-assisted portfolio management. Furthermore, it examines the potential of decentralized AI (DeAI) to address issues of data privacy, bias, and centralization in traditional AI systems. However, the convergence of DeFi and AI also presents significant challenges, including regulatory uncertainty, scalability limitations, data privacy and security risks, and talent scarcity. The paper highlights the need for a multi-stakeholder approach to address these challenges and realize the full potential of DeFi-AI integration. The implications of DeFi-AI convergence for the financial industry and society are discussed, emphasizing the potential for increased financial inclusion, innovation, and stability. Finally, the paper identifies future research directions and calls for collaboration among researchers, developers, regulators, and industry participants to drive responsible innovation in this emerging field.
Vangelis Malamas, Thomas K. Dasaklis, Veni Arakelian, Gregory Chondrokoukis
Bond issuance is a highly technical and complicated process, including disparate regulatory frameworks, limited traceability and auditability, settlement failures, and mutually untrusted stakeholders. Green bond issuance presents additional challenges, as the qualification of a bond as ‘green’, third-party verification is needed to guarantee that the proceeds fund environmentally beneficial projects. This implies additional administrative and compliance costs. Blockchain technology can address some of the issues mentioned above, to establish trust in impact reporting green bond processes. To this end, we propose a blockchain-enabled green bond issuance architecture that safeguards investors' confidence in the bond's green credentials while keeping the issuer from being accused of greenwashing. To adjust the process of bond issuance to a blockchain-enabled model, we tokenize the bonds. The digital token is created through a smart contract with a specific standard (in our case, ERC-20). Within the smart contracts developed, we use various functions to handle the prerequisites of validators and regulators' approval based on the documentation presented and the parameters of rate and maturity requested by the issuer. We use a separate smart contract to offer forensic-by-design services. The overall system also considers various regulatory compliance instruments and enhances the access of regulatory bodies to issuance records.
Sitara Karim, Brian M. Lucey, Muhammad Abubakr Naeem, Larisa Yarovaya
Abstract The current study investigates the extreme risk dependence between green bonds and financial markets by employing the dual approaches of time‐varying optimal copula and extreme risk spillover analysis of dynamic conditional Value‐at‐Risk. We report significant symmetric (asymmetric) tail‐dependent copulas in the upper (lower) tails characterizing independent regimes. Green bonds offer sufficient diversification, safe‐haven, and hedging opportunities during stable and distressing times to financial markets. The extreme risk spillovers revealed that COVID‐19 transformed the spillovers between green bonds and financial markets except Bitcoin. We proposed insightful implications for policymakers, governments, investors, and portfolio managers to relish the findings for their investment avenues.
Green bonds have gained significant attention in supporting sustainable development goals for achieving sustainability. During the issuance of green bonds, there are a few concerns such as standardization, greenwashing, and lack of benefits that can be gained with green bonds. However, blockchain technology is a promising solution for green bond issuance because it has already shown its impact on different finance activities. This study aims to address and analyze the role and significance of green bond issuance for meeting sustainability with blockchain technology and also suggested recommendations for future research. Decentralized application based on the Algorand blockchain and high-level architecture proposed for the issuance of green bonds is at the primary level. There is no discussion regarding standardizing the environmental data, and the number of benefits gained by the green bond is not addressed in the previously published literature. From the analysis, it has been identified that a similar framework of blockchain cannot be implemented as the geographical and environmental parameters are quite different for every nation. So, every nation needs to customize the framework according to the nation's requirements. This study is the first attempt to combine information from previously published research about green bond issuance and integration of blockchain for green bond issuance, enlightening the disruption caused in the issuance of green.
Save the green and live in the green should be the mottos of the modern high-tech world. Industry 4.0 introduces the most advanced automated technologies, but many of them cause high CO2 emissions around the globe that need strong compelling force because any catastrophic changes in the climate causes dreadful vandalization in the economy and society. This chapter discusses the climate-friendly economic and low-emission technological developments in the 4IR and 5IR by using the practical-sense mechanism. Reading this chapter will therefore increase the knowledge of blockchain technology (BT), artificial intelligence (AI), and climate finance in the low carbon economic sustainability. Furthermore, the proposed green development themes (i.e., hybrid green city and industrial layout, hybrid low emission agriculture farm) affirms the sustainable low carbon economic developments in the forthcoming Industry 5.0. Finally, the strategic recommendations will assist in developing the low carbon economy with the perfection of BT, AI, and global climate finance in the world.
Meeting on the second anniversary of the Paris Agreement signing, the United Nations Climate Change Secretariat founded the Climate Chain Coalition (CCC) in 2017. Backed by a number of multi-stakeholder groups like the Blockchain for Climate Foundation, the Ottawa-based CCC promotes the use of this emergent technology as a pathway to achieving the goals of the Paris Agreement. What kind of ‘cooler’ world are blockchain-based climate projects conjuring? This article scrutinizes the shared visions materializing in particular across climate finance experiments, locating them as extensions of existing imaginaries of how financial markets can address planetary concerns. The imaginaries identified underpin these ‘cool’ technological feats yet provide only incremental improvements to existing modes of market-led climate governance that are far from the scale required to actually conjure a cooler planet.
The subject of the study is to minimize the risks of strengthening international financial sanctions on economic entities by building a decentralized mechanism for direct financing of budget recipients without the participation of the Federal Treasury in Russia, while ensuring that the payer fulfills its obligations and control over the targeted use of funds. The relevance of the study is to consider this mechanism in the context of international sanctions and as an alternative to a one-time collection from large businesses (windfall tax or tax on excessive profits of past years). The actuality is also confirmed by the use of the principle of “uberization” of relations between public finance entities, while the effectiveness and the need of “uberization” has already been confirmed in business practice. It is established that the financing of part of government spendings through such an alternative mechanism as “Uber” will reduce the sanctions risks for representatives of the business community. In the course of the study, specific examples of projects funded from the federal budget were analyzed, and these projects could first of all be transferred to the proposed new budget pilot financing mechanism. The conclusion is made about the efficiency of the proposed concept and the need for its further elaboration within the increased number 1) of enterprises and organizations directly financing the budget system expenditures on this electronic platform, and 2) of social, cultural and scientific projects financed with its help, gradually “uberizing” an increasing segment of budget financing.
Abstract 157 This article discusses the regulatory definition of collective investment undertakings (CIUs) as provided for by Article 4 (1) (a) AIFMD and Article 1 (1) UCITSD in the context of traditional family offices, holding companies, and joint ventures, and distinguishes them from more recently observed digital asset pools such as digitally managed accounts, crypto lending, crypto staking, and decentralized autonomous organizations.Testing the legal definition of CIUs in the context of traditional and digital pooled investments allows not only for the delineation of the scope of AIFMD (and to a lesser extent, UCITSD), but also provides insights on the desirable content of Level 2 regulation under MiCA. While ESMA guidance based on many years of supervisory experience sets the limits on traditional use cases, the digital boundaries of collective investment schemes are largely untested and to some extent uncertain, resulting in high costs for legal advice, as demonstrated by our brief look into MiCA set out in this article. To address these matters, we argue in favor of broad default rules on pooled finance, paired with exemptive powers from individual or all rules where a disparity exists between the purpose of regulation and the regulated activities. If paired with carve-outs for applications below EUR 5 million (where retail investors are present) and EUR 100 million (sophisticated clients only), these default rules would assist supervisory authorities in setting adequate boundaries for investment fund regulation of innovative financial products. After the introduction (Pt. I), Pt. II outlines the legal definition(s) of CIUs; Pt. III discusses the regulatory limits in the context of traditional use cases; Pt. IV analyzes the limits for digitally managed accounts, decentralized autonomous organizations (DAOs), and decentralized finance as a whole (referred to collectively as “digital limits”); Pt. V presents our policy considerations; and Pt. VI concludes.
A. Loshkareva, Yu. Dolgikh, А. Я. Лошкарева, Ю. А. Долгих
The article is devoted to the study of synthetic assets within the ecosystem of decentralized finance (DeFi). The interpretations of the concept of «decentralized finance» are analyzed, the main advantages of DeFi are determined. The economic essence, features, mechanism of functioning, advantages and disadvantages of synthetic assets as the most interesting and promising segment of the ecosystem of decentralized finance are considered.
A K Das, Aryan Ramachandran, Ayush Thombare, Swarali Ghangurde
This paper examines the relationship between green bonds and cryptocurrencies that specifically follow the Proof-of-Stake consensus mechanism. A lot has been discussed about the positive bi-directional and asymmetric relationship between green bonds and bitcoins, the most widely known proof-of-work cryptocurrency and the ineffectiveness of green bonds as hedging instrument for bitcoins. In this study, the author has tried to check whether there is a relationship between green bonds and Proof-of-stake cryptocurrencies using the Vector Error Correction Model (VECM). The secondary data under consideration is the daily data of the S&P Green Bond Index (SPGB) to track the performance of relevant green bonds and the daily data of Solana and Cardano to track the performance of Proof-of-stake cryptocurrencies. It is found that there exists a negative long-term relationship between green bonds and the selected cryptocurrencies. The author also conducts a portfolio analysis to demonstrate how green bonds function as a useful risk-diversification tool in conjunction with cryptocurrencies that follow the proof-of-stake consensus mechanism.
This paper examines the dynamic linkages of green bond with the energy and crypto market. The S&P green bond index (RSPGB) is used as a proxy for the green bond market; S&P global clean energy index and ISE global wind energy (RIGW) are used as proxies for the renewable energy market, and; Bitcoin and Ethereum (RETHER) are used as the proxies of the crypto market. The daily prices of these constituent series are collected using Bloomberg from October 3, 2016 to February 23, 2021. We undertake an empirical analysis through the application of three key tests, namely: dynamic conditional correlation (DCC), Diebold and Yilmaz (Int J Forecast 28(1):57-66, 2012. 10.1016/j.ijforecast.2011.02.006), Baruník and Křehlík (J Financ Econom 16(2):271-296, 2018. 10.1093/jjfinec/nby001) model. The DCC reveals no dynamic linkages of volatility from the green bond to the energy and crypto market in the short run. Referring to Diebold and Yilmaz (2012), it dictates that the green bond (RSPGB) is a net receiver while the energy market (RIGW) and cryptocurrency (RETHER) are the largest and least contributors to the transmission of the volatility. Additionally, the Baruník and Křehlík (2018) model confirmed that the magnitude of the total spillover is high in more prolonged than shorter periods, suggesting reduced diversification opportunities. Overall, the present study exemplifies the significance of the green bond market as protection against risk.
This final chapter will show that we have no option but to master sustainability by deploying technology and finance effectively. The shift from physical to digital is on its way, and technology is accelerating manufacturing from global to local, dematerialisation, and sharing towards a circular economy. Digital is a prerequisite to green electrification, but we still have a long way to go. Finance powers innovation, but this also transforms finance. Financial technologies are used to automate investments, insurance, trading, banking services, and risk management. Finance is going digital, and distributed ledger technologies will transform financial markets. Greenwashing is likely to diminish due to increased transparency (supported by technology) and mandatory ESG reporting, although geopolitical ESG risk showed its ugly face in the war against Ukraine. It is time to rethink how markets integrate ESG towards a healthy planet and a prosocial society that makes our children proud.