DEEP - DIGITAL TECHNOLOGIES AND MONETARY POLICIES: THE ROLE OF CRYPTOCURRENCIES

Codice progetto P2022EZBTE – CUP B53D23026500001

The rapid integration of technological advancements in the digital sector, particularly through innovations like cryptocurrencies, is transforming the financial system and influencing economic and social structures. This project aims to deepen understanding of this transformation by addressing three key areas:

  1. Mapping the cryptocurrency landscape: A comprehensive analysis of cryptocurrency types, market dynamics, risks, and systemic implications will be conducted. This includes assessing their volatility, market exchange mechanisms, and representation within a financial balances framework to evaluate potential threats to financial stability and systemic risk accumulation.
  2. Exploring Central Bank Digital Currencies (CBDCs): The project will examine how CBDCs could reshape monetary policy by enhancing transmission channels, leveraging programmability via distributed ledger technology (DLT), and addressing economic resilience, policy interactions, and inequality.
  3. Improving private cryptocurrency exchanges: The project proposes a theoretical framework for a novel "Proof of Efficiency Loss" consensus algorithm, designed to enhance the sustainability of private cryptocurrencies by reducing energy consumption and increasing operational efficiency. This conceptual development will examine the current state of consensus algorithms and outline potential pathways for improvement. However, the realization of this proposal would require further engineering and computational contributions to validate and implement the model in practice.

 

By addressing these interconnected dimensions, the project seeks to contribute to a nuanced understanding of the financial and technological innovations shaping the global economy.