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Digital national currency: coming soon to a market near you

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Introduction to the Digital National Currency;
Information on the Scandinavian market and consumer;
Snapshot of Sweden and e-Krona;
Overview of other Global Efforts on Digital National Currency;
Current status in Turkey;
Review of Technology Acceptance in terms of Consumer Adoption;
Discussion of Future Research Orientations and Ideas.

Published in: Leadership & Management
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Digital national currency: coming soon to a market near you

  1. 1. "Digital National Currency” coming soon to a market near you Dr. Selcen Ozturkcan Selcen.Ozturkcan@lnu.se
  2. 2. Content - Introduction to the Digital National Currency - Information on Scandinavian market and consumer - Snapshot of Sweden and e-Krona - Overview of other Global Efforts on Digital National Currency - Current status in Turkey - Review of Technology Acceptance in terms of Consumer Adoption - Discussion of Future Research Orientations and Ideas
  3. 3. Building New Research
  4. 4. • Payment method • only in electronic form • not tangible • can be used • to purchase goods and services • or restricted to certain online communities (e.g., gaming, social networks) • can be transferred between • entities • users • allows borderless transfer of ownership as well as instantaneous transactions What is Digital Currency? also known as digital money, cyber-cash, e-cash, cryptocurrency
  5. 5. CBDC Central bank digital currency also called "Digital Fiat Currency" or "digital base money" https://www.bis.org/cpmi/publ/d174.pdf Bech, Morten L. and Garratt, Rodney, Central Bank Cryptocurrencies (September 17, 2017). BIS Quarterly Review September 2017 The money flower: a taxonomy of money
  6. 6. https://www.bis.org/cpmi/publ/d174.pdf Key design features of central bank money
  7. 7. Coinisseur, Tommaso Mancini-Griffoli, Deputy Division Chief Monetary and Capital Markets Department International Monetary Fund (IMF) CBDC • allows individuals to hold liability in a central bank, instead of commercial banks • reduce costs and enable financial inclusion, particularly in emerging markets and lower-income countries • help satisfy costs of maintaining a payments system • Currently, Uruguay, Sweden, China, Ukraine and Eastern Carribean Central Bank are the notable central banks around the world, either exploring or piloting a central bank digital currency. https://www.imf.org/en/Publications/Policy-Papers/Issues/2019/06/27/Fintech-The-Experience-So-Far-47056 https://businessblockchainhq.com/business-blockchain-news/imf-discusses-central-bank-digital-currency-developments/ Jun-Jul 2019
  8. 8. What’s going on in the Nordic markets?
  9. 9. https://en.bitcoin.se/articles/this-is-the-swedish-e-krona
  10. 10. Cash withdrawals and cashless transaction per capita (2017) https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/financial-services/Downloads/Chasing_Cashless-The_rise_of_Mobile_Wallets_in_the_Nordics.pdf
  11. 11. https://www.bis.org/publ/qtrpdf/r_qt1803g.pdf
  12. 12. https://www.bis.org/publ/qtrpdf/r_qt1803g.pdf
  13. 13. https://www.bofbulletin.fi/en/charts/chart/online-banking-more-common-in-finland-than-in-many-other-euro-area-countries/ https://www.bofbulletin.fi/en/charts/chart/many-nordic-banks-much-more-cost-efficient-than-banks-in-other-countries/ Online banking is very common in Nordics
  14. 14. https://www.bofbulletin.fi/en/charts/chart/mobile-broadband-subscriptions-surpass-the-number-of-inhabitants-in-the-nordic-countries/
  15. 15. Mobile in-store and domestic P2P-payments (2018) https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/financial-services/Downloads/Chasing_Cashless-The_rise_of_Mobile_Wallets_in_the_Nordics.pdf
  16. 16. https://www.postnord.com/en/media/publications/e-commerce/e-commerce-in-the-nordics-2018-review/
  17. 17. https://www.postnord.com/en/media/publications/e-commerce/e-commerce-in-the-nordics-2018-review/
  18. 18. https://www.postnord.com/en/media/publications/e-commerce/e-commerce-in-the-nordics-2018-review/
  19. 19. https://www.postnord.com/en/media/publications/e-commerce/e-commerce-in-the-nordics-2018-review/
  20. 20. https://info.microsoft.com/rs/157-GQE-382/images/Digital%20Transformation%20in%20the%20Nordics.pdf Company perspective - Digital transformation maturity think and act “digital first” developing core offering not yet fully adopted tend to revert to ‘business as usual’
  21. 21. Sweden • Scandinavian country in northern Europe • 3rd largest area in the European Union • population of ~ 10M • ~USD53k gross domestic product per capita • 7th richest country in the world • economy built on engineering, telecommunications, automotive and pharmaceutical industries • well developed IT-sector • has almost as many tech startups as Silicon Valley https://www.forbes.com/sites/alisoncoleman/2015/10/23/scandinavia-the-coolest-place-for-a-start-up/#28a86a9d32b1 https://www.euractiv.com/section/innovation-industry/news/nordic-countries-lead-eu-in-digital-entrepreneurship/ https://data.worldbank.org/country/sweden Government goal (2011): “Sweden should become the best in the world exploiting the opportunities of digitisation”
  22. 22. to replace their credit card information, identification, keys, train tickets, among other everyday items https://www.zerohedge.com/news/2018-05-18/biohack-thousands-sweden-have-implanted-microchips-under-their-skin https://nypost.com/2019/07/14/swedish-people-are-getting-chip-implants-to-replace-cash-credit-cards/ Ready to embrace technological novelties
  23. 23. Mobile payment services Dec 12, 2012 midnight: launch of mobile payment Swish (by six banks) • disruptive innovation in the mobile payment service industry • succeeded in creating an interoperable service for the Swedish market • substitute to cash for person-to-person payments www.getswish.se https://medium.com/@etiennebr/swish-the-secret-swedish-fintech-payment-company-created-by-nordic-banks-and-used-by-50-of-swedes-cfcf06f59d6f
  24. 24. Does Digital Currencies (e.g., Bitcoin) meet Critical Demands on Payments? https://www.slideshare.net/AsianProductivityOrganization/future-cashless-society
  25. 25. Cashless society https://www.reuters.com/article/us-sweden-cenbank-cashless/riksbank-predicts-sweden-will-be-cashless-within-five-years-idUSKBN1O327W https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interest-rates-work/ https://www.spglobal.com/en/research-insights/articles/tech-disruption-in-retail-banking-swedish-consumers-dig-digital-and-banks-deliver https://tinyurl.com/yyu3k9m4
  26. 26. https://ec.europa.eu/newsroom/dae/document.cfm?doc_id=59909 - Sweden
  27. 27. • ensure that the Swedish public has access to central bank money • provide a payment infrastructure and may increase payment system resilience • provide a means of payment primarily between households and firms, it would be accessible 24/7 and process payments in real time https://www.suerf.org/docx/r_ffd2257b586a72d1fa75f4ba2ad914e6_5175_suerf.pdf retail payments and cashless society use of paper cash is quickly dwindling à the general public would no longer have access to central bank money retail payments developments à no longer have a domestic infrastructure for retail payments, given the dominance of global card schemes, pan-European clearing and the ECB’s trend towards multi-currency settlement systems e-krona
  28. 28. https://www.riksbank.se/en-gb/payments--cash/e-krona/e-krona-reports/e-krona-project-report-2/
  29. 29. https://www.riksbank.se/en-gb/payments--cash/e-krona/
  30. 30. https://www.finextra.com/videoarticle/2145/p27-project-to-create-the-worlds-first-cross- border-payment-region-in-the-nordics A single pan-Nordic payment infrastructure for the 27 million inhabitants of Denmark, Sweden, Norway and Finland. https://www.project27.info/ https://insights.nordea.com/en/ideas/p27-working-together-towards-a-nordic-payment- area/
  31. 31. https://www.thelocal.se/tag/e-krona
  32. 32. What’s going on elsewhere in the world?
  33. 33. 2017 à instituted a sweeping ban on cryptocurrency activities, including trading, wallets, and ICOs (initial coin offering). Recently à authorities have spoken out about accelerating the development of a central bank digital currency (CBDC). https://technode.com/2019/07/23/china-fast-tracks-development-of-national-digital-currency-in-response-to-libra/ People's Republic of China
  34. 34. 2014 à all trades using virtual currencies and all benefits from selling them is allowed only for registered financial organizations (e.g., banks) 2017 à Ukrainian National Bank required certain regulation to admit Bitcoin as real money 2018 à almost finished legislation aimed at regulating all operations with digital assets Recently à Ukrainian National Bank expressed readiness to collaborate with the Bitcoin foundation to work on the new project called Ukrainian Bitlicense Ukraine https://cointelegraph.com/tags/ukraine
  35. 35. https://www.emirates247.com/business/uae-and-saudi-arabia-announce-launch-of-common-digital-currency- aber-2019-01-29-1.678791 http://www.koreatimes.co.kr/www/biz/2018/06/367_250860.html http://www.jamaicaobserver.com/latestnews/Bahamas_to_introduce_digital_currency ?
  36. 36. “A decline in cash usage has prompted us to think about whether at some future date a number of new attributes that are important for ensuring an efficient and robust payment system and confidence in the monetary system will be needed” https://members.nfcworld.com/25796/norges-bank-papers-central-bank- digital-currencies/ https://www.reuters.com/article/us-israel-cenbank-currency/israel-central- bank-mulls-issuing-digital-currency-for-faster-payments-idUSKBN1EI0D5 https://news.bitcoin.com/uruguay-first-in-the-world-to-launch-digital-currency- not-bitcoin-it-stresses/
  37. 37. https://www.economist.com/the-economist-explains/2019/07/12/what-is-libra https://www.theguardian.com/technology/2019/jun/18/what-is-libra-facebook- new-cryptocurrency https://www.theguardian.com/technology/2019/jun/18/libra-facebook-cryptocurrency-new-digital-money-transactions Jun 2019
  38. 38. https://tinyurl.com/y5j22glo
  39. 39. What about e-TL in Turkey?
  40. 40. 11th Development Plan – Turkey (2019-2023) http://www.sbb.gov.tr/wp-content/uploads/2019/07/OnbirinciKalkinmaPlani.pdf 09 Jul 2019 * available only in Turkish
  41. 41. https://think.ing.com/reports/cracking-the-code-on-cryptocurrency/ The ING International Survey Mobile Banking 2018 asked nearly 15,000 people across Europe (including Turkey), the USA and Australia what they think of the cryptocurrency opportunity …
  42. 42. Have you ever heard of cryptocurrency? https://think.ing.com/reports/cracking-the-code-on-cryptocurrency/
  43. 43. Do you own some cryptocurrency? https://think.ing.com/reports/cracking-the-code-on-cryptocurrency/ Do you expect to own cryptocurrency in the future?
  44. 44. eGovernment performance of Life Events - Turkey (2013) http://ec.europa.eu/information_society/newsroom/cf/dae/document.cfm?action=display&doc_id=5573
  45. 45. Literature
  46. 46. Kobrin, S. (1997). Electronic Cash and the End of National Markets. Foreign Policy, (107), 65-77. doi:10.2307/1149333 ”E-cash and the increasing importance of digital markets pose problems for central government control over the economy and the behavior of economic actors; they also render borders around national markets and nation-states increasingly penneable--or, perhaps, increasingly irrelevant. In a world where true e-cash is an everyday reality, the basic role of government in a liberal market economy and the relevance of borders and geography will be drastically redefined.” (Kobrin, 1997)
  47. 47. Introduction to technology acceptance model (TAM) PEU : the degree to which a person believes that using the system will be free of effort PU : the extent to which a person believes that using a particular technology will enhance her/his job performance Davis, F. D. (1986). A technology acceptance model for empirically testing new end-user information systems: Theory and results. Cambridge, MA: Massachusetts Institute of Technology. Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13, 319–340. doi:10.2307/249008 Davis, F. D., Bagozzi, R. P., & Warshaw, P. R. (1989). User acceptance of computer technology: A comparison of two theoretical models. Management Science, 35(8), 982–1003. doi:10.1287/mnsc.35.8.982 Perceived Usefulness Perceived Ease of Use External Variables Attitude Toward Using Behavioral Intention to Use Actual System Use
  48. 48. Technology acceptance model (TAM) and electronic commerce Pavlou, P. A. (2003). Consumer acceptance of electronic commerce: Integrating trust and risk with the technology acceptance model. International Journal of Electronic Commerce, 7(3), 101–134. Actual Transaction Intention to Transaction Trust Perceived Usefulness Perceived Risk Perceived Ease of Use
  49. 49. What are the • perceived ease of use, • perceived usefulness, and • perceived risk factors for • Consumers • Firms • Banks • Regulators with regard to national digital currency in Sweden and Turkey? TAM Questions Daniel Folkinshteyn & Mark Lennon (2016) Braving Bitcoin: A technology acceptance model (TAM) analysis, Journal of Information Technology Case and Application Research, 18:4, 220- 249, DOI: 10.1080/15228053.2016.1275242
  50. 50. ”The elderly and those who struggle with technology are at risk of being left behind just as people who can’t afford smart phones or those who don’t have credit or debit cards.” https://dailysweden.com/2019/07/29/sweden-set-to-be-worlds-first-cashless-society-australia-is-following/ What about immigrants / disabled /elderly / unbanked ???
  51. 51. Effects of existing • Internet and communications infrastructure • level of digital adoption: use of Internet • use of cash • access points to the financial system • technologically neutral and secure methods of payment What about … https://www.bbvaresearch.com/wp-content/uploads/2018/10/CBDCs-in-LATAM.pdf
  52. 52. reduce to 1 ??
  53. 53. What else?
  54. 54. Dr. Selcen Ozturkcan Selcen.Ozturkcan@lnu.se

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