The Central Bank Digital Currency (CBDC) — Opportunity and Risks from an Islamic Perspective

Patria Yunita and Didik Permono

Chapter 6 in Islamic Economic Institutions in Indonesia:Are they Successful in Achieving the Maqasad-al-Shari'ah, 2023, pp 83-108 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This research proposes to analyze the Central Bank Digital Currency from an Islamic monetary perspective. This research examines the advancement of the volatility of cryptocurrency as the base money of the Central Bank Digital Currency. The assessment uses 7 computerized types of money and 12 stable coins and subsequently differentiates them and the capriciousness of gold expenses. We used Autoregressive Conditional Heteroscedasticity (ARCH) and Generalize Autoregressive Conditional Heteroscedasticity (GARCH). This system singled out the fact that the unusualness of the residuals is not steady, which causes heteroscedasticity in the data inspected. The data sources are the world gold council and coinmarketcap.com. The eventual outcomes of the assessment derive that the Tetha and International Lira were the most volatile cryptocurrencies compared to gold. Our analysis also concluded that even though this type of cryptocurrency is a metal-backed cryptocurrency, the volatility is quite high. Gold money has a long-term volatility of 67 times the volatility of gold, while E-Gold has 8 times the volatility of gold.

Keywords: Islamic Economics; Institutions; Maqasad al-Shari'ah; Islamic Capital Market; Shari'ah Entrepreneurship; Indonesia; Finance; Economics; International Finance; Corporate Finance; Islamic Finance (search for similar items in EconPapers)
JEL-codes: A1 A14 F3 (search for similar items in EconPapers)
Date: 2023
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