In the aftermath of the systemic financial crises of 2007-9, several scholars argued that the problem of systemic financial crises is not well understood. At the same time, the introduction of digital technologies led to new threats and opportunities for the design of the monetary and financial system. For example, thousands of private cryptocurrencies have been implemented and hundreds of research papers on the (possible) introduction of public digital currencies have been published. It is often not explained why these new forms of digital money are needed and which (systemic) problems they (can) solve. In addition, the literature does not provide requirements nor guidelines to shape the development of the monetary and financial system in the digital age. This thesis applies design science to the monetary and financial system as a whole. The application of this novel methodology offers new possibilities to examine this complex system. The contribution of this thesis is threefold. First, different theories on money, banking and systemic financial crises have been researched through an extensive literature review and balance sheets. Second, those theories have been used to develop design requirements and guidelines. Finally, the consensus and pivotal dissensions about the systemic problem(s) of the current monetary and financial system, requirements and guidelines among experts have been identified through semistructured interviews. This research process results in widely supported requirements that demarcate the design space and widely supported guidelines that aim to give direction within the design space, that is, to the future development of the monetary and financial system.
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The recent bank collapses and bailouts highlight the fragility of the banking system and our bank deposits. The digital euro is an opportunity to reconfigure our monetary system to serve the interests of people and society, by making money safer and more inclusive. However, the European Central Bank’s (ECB) current proposal for a digital euro falls short of this potential. The current plan relies heavily on private financial intermediaries and envisions putting important limitations on the use of digital euros, thereby impacting its capacity to be a universally accessible public good and risking undermining the uptake of the digital euro. By heeding to the bank lobby and baking their interests into the design of the digital euro, the ECB is missing an opportunity to develop an appealing and public digital alternative to private bank deposits. The digital euro must be developed with the aim of benefiting people and society over private interests, and these considerations should guide its design. In the short term, the digital euro should: 1. Be universally accessible. People should be able to access digital euros through a diverse range of intermediaries, which include non-profit and public entities. Implementing a tiered identification system for account-based digital euros, and introducing a value-based option, would ensure the availability of digital euros to the most vulnerable segments of society. 2. Be free of cost for users. Any future legislative framework on the digital euro should include a list of basic services that should be provided for free to users, such as opening and managing an account and the provision of a payment instrument (e.g. a card). 3. Offer a high level of privacy and data protection. Cash, which is fully anonymous, should be used as the baseline when developing the digital euro. A value-based option should be introduced alongside an account-based one, and it should be designed to be fully anonymous. For the account-based option, a ‘privacy threshold’ can ensure that users’ data for small transactions is protected. 4. Have a clear European Central Bank branding. Clear branding will help to differentiate public digital euros from private bank deposits. 5. Bring resilience to the payment system. By providing an offline value-based option, and by ensuring that the digital euro’s legal and technical core infrastructure is public and works independently of any private system, we can offer an alternative to existing payment rails and increase resiliency in case of outages. The digital euro is also an opportunity to improve financial stability by transforming the banking system, and helping central banks to more effectively carry out their monetary policy. The design of the digital euro should be flexible enough to allow for the achievement of these longterm goals, and more research should be conducted to explore how different features could help achieve them. For instance, a digital euro without any holding limit could reduce moral hazard in the banking sector, and the adjustment of interest rates on digital euro deposits and direct monetary transfers could improve the transmission of monetary policy.
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In recent years, the debate about the design of the monetary system has become increasingly prevalent. A major topic within this debate is central bank digital currency or CBDC for short. A survey by the Bank of International Settlements (BIS) shows that in 2022, nine in ten central banks (CB) explored a digital variant of their own currency (Kosse & Mattei, 2022). In the euro area, the European Central Bank (ECB) is conducting a wide-range study of the pros and cons of a CBDC, in the form of a digital euro. Other CBs are at different stages of the research cycle. The Chinese central bank is experimenting extensively with its e-CNY and has been conducting research since 2014 (Luo, 2022; Prasad, 2021). The Swedish Riksbank published its first report on the possible designs and effects of the e-krona in September 2017 (Sveriges Riksbank, 2017). Against all these various studies and experiments is the Bahamian Sand dollar, the world's first, by 2020, fully implemented CBDC. The Bahamas is not the only country; in 2022, Jamaica fully introduced the JAM-DEX (CBDC Tracker, 2023). Since CBDCs are a relatively new phenomenon, there is logically little empirical data to support the potential advantages and disadvantages. The fully implemented Sand dollar can confirm or refute some of the claimed theoretical advantages and disadvantages, and lessons can be distilled from this case for the introduction of other CBDCs. This paper first discusses the (theoretical) motivations for implementing the Sand dollar, then discusses its operation and current low adaptation rates. Finally, it derives lessons that can be used in other CBDC cases.
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Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. https://bitcoin.org/bitcoin.pdf outlined an alternative to the current monetary system in which banks are replaced by a peer-to-peer system to issue and transfer digital money: the Bitcoin. While Bitcoin has attracted a substantial investment volume, the system has not achieved the status of a viable alternative monetary system. However, the distributed ledger technology (DLT) underlying the payment system is being applied successfully by financial institutions and is likely to have important implications for the future of money and banking. In this paper we therefore focus on the most advanced distributed ledger application in the financial industry: R3 Corda. This paper is structured as follows. In the first section, we relate the debate about systems of money creation to the rise of Bitcoin. Next, the development of R3 Corda is discussed and the lessons learned for monetary reform. We conclude with an assessment of the scope and likelihood of monetary reform as a consequence of DLT applications by central banks.
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This technical report describes "validation of the 'Target system definition"
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This chapter presents the currently not established and identifies design requirements for new systems to address this challenge and provide directions for possible improvement. As a result, this chapter introduces the concept of SamenMarkt®, a participatory system in which multi-agent system technology enables distributed price negotiation, distribution and communication between producers, retailers and consumers.
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In conclusion, the debate on the digital euro is not so much a technocratic and legislative affair as a defining political moment in the history of Europe’s money and payments system. It is an opportunity to redefine the future of money, payments and financial intermediation in a way that is in line with the principles of inclusiveness, fair markets and innovation. Europeans deserve a digital euro that transcends the narrow interests of the banking lobby and embodies the promise of a fairer and more competitive monetary and financial landscape.
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The transition towards a sustainable and healthy food system is one of the major sustainability challenges of today, next to the energy transition and the transition from a linear to circular economy. This paper provides a timely and evidence-based contribution to better understand the complex processes of institutional change and transformative social-ecological innovation that takes place in the food transition, through a case study of an open innovation and food transition network in The Netherlands, the South-Holland Food Family (Zuid-Hollandse Voedselfamilie). This network is supported by the provincial government and many partners, with the ambition to realize more sustainable agricultural and food chains, offering healthy, sustainable and affordable food for everyone in the Province of South-Holland in five to ten years from now. This ambition cannot be achieved through optimising the current food system. A transition is needed – a fundamental change of the food system’s structure, culture and practice. The Province has adopted a transition approach in its 2016 Innovation Agenda for Sustainable Agriculture. This paper provides an institutional analysis of how the transition approach has been established and developed in practice. Our main research question is what interventions and actions have shaped the transition approach and how does the dynamic interplay between actors and institutional structures influence institutional change, by analysing a series of closely related action situations and their context, looking at 'structure' and 'agency', and at the output-outcomes-impact of these action situations. For this purpose, we use the Transformative Social-Ecological Innovation (TSEI)-framework to study the dynamic interplay between actors and institutional structures influencing institutional change. The example of TSEI-framework application in this paper shows when and how local agents change the institutional context itself, which provides relevant insights on institutional work and the mutually constitutive nature of structure and agency. Above institutional analysis also shows the pivotal role of a number of actors, such as network facilitators and provincial minister, and their capability and skills to combine formal and informal institutional environments and logics and mobilize resources, thereby legitimizing and supporting the change effort. The results are indicative of the importance of institutional structures as both facilitating (i.e., the province’s policies) and limiting (e.g. land ownership) transition dynamics.
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IT organizations and CEO‟s are, and should be, concerned these days about the (lack of) data confidentiality and the usage of „shadow‟ IT systems by employees. Not only does the company risk monetary loss or public embarrassment, the senior management might also risk personal fines or even imprisonment. Several trends reinforce the attention for these subjects, including the fact that an increasing number of people perform parts of their work tasks from home (RSA, 2007) and the increasing bandwidth available to internet users which makes them rely on the Internet for satisfying their business and personal computing needs (Desisto et al. 2008). Employee compliance with the existing IT security policies is therefore essential. This paper presents a study on factors that influence non-compliance behavior of employees in organizations. The factors found in literature are tested in a survey study amongst employees of a big-four accountancy firm in the Netherlands and Belgium. The study concludes that stricter IT governance and cultural aspects are the most important factors influencing non-compliance behavior.
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This report describes the validation of a "framework that delivers insight into the tangible and intangible effects of a mobile (IT) system, before it is being implemented".
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