Main trends in the development of institutions ensuring the financial sovereignty of the country through digital currencies

Alexey A. Shchaulin (), Alexey S. Kharlanov () and Nazira A. Gumar ()
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Alexey A. Shchaulin: Diplomatic Academy of the Ministry of Foreign Affairs of Russia
Alexey S. Kharlanov: Diplomatic Academy of the Ministry of Foreign Affairs of Russia
Nazira A. Gumar: Caspian University

Economic Consultant, 2023, vol. 2, issue 2, 73-83

Abstract: Introduction. The development of blockchain and cryptocurrency technologies provides new opportunities for creating and managing digital currencies. This allows countries to optimize their financial systems and reduce dependence on traditional currencies. The study and development of institutions that ensure financial sovereignty through digital currencies is a relevant and vital topic to ensure the stability and sustainable development of all economies. The article analyzes the main trends in the development of institutions that ensure the financial sovereignty of a country through digital currencies. Materials and Methods. The study materials were articles from periodical peer-reviewed journals and other publications focused on financial technologies and digital currencies. The study used the methods of comparative analysis and case study. Results. In 2014, the Bank of Russia launched the Financial Messaging System (SPFS), which became an alternative to SWIFT for most Russian users. The SPFS allows sending messages in 3 formats: SWIFT, ISO 20022, and the client’s formats. For Russian banks, the SPFS has become a convenient platform for transactions within the national economy under sanctions. From 2018 to 2023, the number of messages sent using the SPFS increased almost 44-fold, from 5 million to 219 million units. The SPFS is not just an indispensable analog in the context of sanction restrictions; its use is significantly more profitable: the Russian analog offers much lower sending and maintenance tariffs than the Western system. At the same time, the SPFS is still inferior to SWIFT in terms of convenience. In particular, cross-border settlements are possible only in a few countries, while SWIFT is available globally with some exceptions. In addition, the volume of data transmitted in the SWIFT message is several times larger than in the Russian analog. Conclusion. The growing interest in cryptocurrencies and central bank digital currencies gives rise to a need to investigate how these instruments can affect states’ financial stability and sovereignty. Developing and implementing strategies for the use of digital currencies may require international cooperation, opening up opportunities for interdisciplinary research in economics, law, political science, and technology.

Keywords: digital currency; financial sovereignty; cryptocurrency; blockchain; central bank; payment system (search for similar items in EconPapers)
JEL-codes: M12 (search for similar items in EconPapers)
Date: 2023
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