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Will money markets change when central banks introduce Central Bank Digital Currency (CBDC) and settle on a large scale using this type of electronic money?
Could the larger-scale use of Central Bank Digital Currency by central banks have an impact on their monetary policies?
With central banks using Central Bank Digital Currency, will the question of the independence of these banks vis-à-vis the fiscal policies of governments increase in importance?
And what is your opinion on the subject?
What do you think?
Please reply,
I invite you all to discuss,
Thank you very much,
Warm regards,
Dariusz Prokopowicz
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Dear Darius,
Thanks for proposing such an interesting question.
As soon as I read your post Mr. Tobin came to my mind: among all the other huge contributions he gave, he stated how usually Central Banks are in a vertical relationship with commercial banks, playing the role of Lender of Last Resort for example. Consequently, we would never tend to think about the existence of a "competition" between CB and banks.
However, I personnally believe that this would be one of the "disruptive" consequences of the introduction of CBDC.
As far as I know, when it comes to CBDC the original goal was creating an innovative tool that could take the best from cash and bank deposits. Since the lowest level of interest that banks can recognize to people depositing money depends on the relative cost of comparable alternatives, this would definitely increase the premium that bank should be ready to recognize in order to win over CBDC. As a consequence, banks would have to increase lending rates too. This undesirable effect led many of the proponents to think about different ways to tackle this shortcoming: should we introduce a maximum limit to the potential amount of CBDC held by people? Wouldn't this mean going too far from the "cash model"?
Obviously, there would be other technical objectives that may be interesting. As we know, the main reason why CB carefully looks at money market is to take the pulse of economical trend (theoretically, demand in money market should increase when the economy is uptrending and decrease when downtrending): on that basis, CB would intervene with the aim of generating desired effects through the so-called "channels of transmission". To keep it simple, if economy is downtrending, CB would lend money at a lower rate to banks (and this reference rate is the one at which money market rate tends to align, theoretically) so that they will lend money to people at more convenient conditions. However, there are many other factors that must be taken into account when decidind whether to fund or not someone (do I trust you? do I have faith in macro conditions?), thus the channel hasn't always worked properly.
CBDC would allow to implement monetary policy decisions directly with final agents... but we would risk to run into the same kind of situation: if the final goal is to increase consumption, are we sure that more CBDC in one's pocket would mean more spent CBDC?
A potential solution to both issues had been proposed a few years ago: when you reach a certain level of non-spent retained CBDC, you start to pay (or you receive a negative interest) on the marginal part.
All these words to arrive to my personal point of view: I guess it will all depend on how CB will introduce CBDC.
Thanks for your attention and for any of the precious comments you may want to leave!
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What is the future of traditional money (coins and banknotes )... in light of the acceleration of the launch of crypto and digital currencies... and how do you see the future of cash payment? ..Are we heading towards a cashless society...Do cryptocurrencies have risks..compared to their advantages
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Othmane Touat: There is a 3000 years old Zadokite saying, "keep all your assets in gold (for it has been blessed by G-D) and never be in debt". In today's world where paper currency, without the gold standard, equities and other financial instruments are used our Hakhamim has advised us zadokites to invest in equities but always to have gold bullion as our major asset. this means except for owning our homes (and cars) we do not invest in real estate, currency trading, interest bearing financial instruments or the new fad of cryptocurrency. we do keep enough cash on hand for daily and emergency expenses. for a people whom G-D has Said, "you shall have no land as homeland or as inheritance because I am your possession and inheritance forever" and had been wandering for 3000 years sometimes given a night to pack up and leave this is the best way for us. of course this is not for others or everyone. thanks.
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Wearing mask has been inevitable, though not bad, it too has established a mask culture over the world. Along with it arose some major problems, likewise, identity issues, healty issues and bargaining. Production of mask has taken the shape of big profit making Industries. There is a lack of knowledge regarding proper wearing of mask. There is no check on production firms. There should be parameters and specifications on material, size, thickness, etc. for producing masks of good quality. Many a time, wearing a mask creates identity crisis and it may create some other social problems if not handled within time. What do you think about these issues? Kindly share your views and experience.
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Wearing face masks is one of the essential means to prevent the transmission of certain diseases such as COVID-19. Surgical mask-wearing in Japan is has been routine practice against a range of health threats. Their usage and associated meanings are explored in Tokyo with both mask wearers and non-mask wearers. Although acceptance of COVID-19 masks is increasing globally, many people feel that social interaction is affected by wearing a mask. In addition, there are individual perceptions of infection risk, personal interpretations of responsibility and solidarity, cultural traditions and religious imprinting, and the need to express self-identity. Therefore, the significance of an in-depth understanding of the cultural and sociopolitical considerations around the personal and social meaning of mask-wearing in different contexts as a prerequisite for assessing the effectiveness of face masks as a public health measure is critical. Furthermore, improving the personal and collective understanding of citizens' behaviors and attitudes appears crucial for developing more effective health contacts about the COVID-19 or similar hereafter.
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Money provides a certain level of living in consumption and existential terms.
Money allows you to undertake investment projects, organize business operations.
However, not everything can be bought with money. However, money does not ensure happiness, not everything can be bought.
For example, true, good friendship and love, and other feelings and higher values can not be bought.
In view of the above, the current question is: Can everything be bought for money?
Please, answer, comments. I invite you to the discussion.
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Can you buy the time?
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Can you suggest the appropriate references too?
Is this proxy good also for Islamic banks?
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z-score is the best proxy to measure the stability of banks.
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In the following link, you can see "loans to deposits ratio of EU countries"
If you look at more detailed, this ratio was nearly %140 in the EU average in 2000 year.
However this ratio has declined from the 2008 to 2019
My question is
How can we explain this ratio in the context of the post keynesian monetary theory ? Because we expect that credits are equal to the deposits in the post keynesian monetary theory.
Sincerely
Engin YILMAZ
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New money has not been created due to depressed demand and the velocity of deposits has decreased because of lower interest rates..
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Do you prefer to run money in banks through deposit and get interest or invest money in financial markets through the available financial instruments?
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I prefer to invest money in financial markets through the available financial instruments
Best Regards Aya Adel
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Universities must accept that there will be consequences if early-career researchers are not properly supported.
Letters from research funders to university leaders rarely raise eyebrows. But a letter sent this month by the heads of the United Kingdom’s three largest medical-research funders did just that.
It says that some types of funding could be withheld unless universities provide better support for early- and mid-career staff — particularly women and trainees. And it warns that institutions could be prevented from bidding for funded posts unless they change their ways. The letter is signed by the heads of the Medical Research Council, the National Institute for Health Research (NIHR) and Wellcome.
What has sparked funder frustration is the fact that universities promise to look after new researchers when applying for grants — making pledges including the provision of quality mentoring, or a path to promotion. But in some cases these commitments are ignored once grant money is banked — sometimes in violation of contracts. No institutions are named in the letter, which has been seen by Nature, but it points to “some very large and well-established Universities and Medical Schools”.
One of the signatories — the NIHR — was an early adopter of tough measures in support of advancing women’s careers. In 2011, it made grants conditional on medical schools achieving a gold or silver in the Athena SWAN Charter, a scheme designed to improve women’s career prospects that has also raised awareness of the structural barriers to gender equality in universities. However, there have been unintended consequences: it is mostly women who have had to take on the additional burden of work needed to meet the scheme’s requirements.
Early- and mid-career researchers face enormous pressures, including job insecurity, fierce competition for academic positions, and administrative burdens. That is in addition to a treadmill of grant applications and publication submissions.
There are clearly lessons to be learnt from the experience of Athena SWAN — including recognizing those universities and university departments where early-career researchers are supported, and where positive action is being taken to advance equality and diversity.
But when it comes to the needs of early- and mid-career clinical researchers, the NIHR and the other medical-research funders are right to challenge universities that are not doing enough. A strongly worded letter warning universities that they could be sanctioned unless they change is a necessary step.
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I think its easy for a young but potential scientist to get research project. Like you can have a look of TWAS website for the opportunity.
Good luck
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I'm wondering about attachment styles in relationship to inherited wealth. I have not found any literature or studies regarding but if any one knows of existing or developing research please let me know!
Much thanks, Michele
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What a great question/future research area. Money is indicative of so many areas of life. I study attachment and have never seriously considered the variable. Best of luck on your work!
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This is a question to the experts familiar with smartphone technology and banknote security features
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Hello,
Banknotes authentification is based on identifying security features which are present in banknotes. Consequently, one or more sensors are required to acheive the bill validation process : IR Sensor, UV Sensor, MG Sensor, FL Sensor.
Nowadays, ordinary smartphones are not equipped with this kind of specefic sensors, so, i beleive that banknotes validation process using smartphones is not actually possible, unless, specific sensors might be built-in separatly.
Best regards,
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I'm a little bit understanding economy. I want to know about the most beneficial way for a country's economy. Sending money from another country in national currency or in foreign currency.
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Dear Ahmed Hesham,
There is no unifying principle in this matter. It depends on the form in which money is sent from country to country, via which type of transfer or in another form. Besides, through a bank or other institution? In addition, it also depends on various currency systems that may operate in individual countries, from international settlements implemented in specific countries. Besides, the optional currencies are just as exchangeable in individual countries, etc.
Best wishes
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What is your opinion about the concept of helicopter money invented by Milton Friedman as an idea for one-time activation of consumption, economic activity and improvement of economic growth in a situation of economic downturn?
Milton Fredman, classic of economic liberalism, Nobel laureate, in 1969 developed a hypothetical situation of consumption activation based on the idea of ​​the concept called helicopter money.
Some central banks have modified this concept and used anti-crisis solutions, among others, in the following two variants:
1. An intervention, anti-crisis purchase of short-term tax motions to improve financial liquidity in the public finance system of the state.
2. Intervention, anti-crisis purchase of the highest level of credit risk incurred by non-regulated debt of commercial banks as part of quantitative easing programs.
Central banks in some countries have used these opportunities since 2008 in order to quickly restore liquidity in the financial system when the global financial crisis appeared, including the objective of maintaining lending of commercial banks, maintaining customer confidence in the banking system and preventing total liquidity collapse financial systems and the aim of excluding the possibility of a decline in the importance of the banking sector in modern economies.
In view of the above, in the context of preparation of new anti-crisis programs for the situation in the future of further global financial crises, the answer to the following questions is:
- Is the possibility of buying short-term government treasury bonds by the central bank an important kind of safety valve on the potential future global financial, monetary, economic, debt crises, etc.?
- In which countries did central banks use the option of buying short-term Treasury bonds, regardless of whether they benefited or failed to purchase the highest-risk non-regulated commercial banks' debt assets under the quantitative easing programs?
- In the context of the above considerations, what do you think about the concept of helicopter money invented by Milton Friedman?
I invite you to the discussion
Best wishes
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Thank you all for sharing your thought on the subject.
I found more of similar to quantitative easing practices that various central banks adopt special when they feel that external stimulus required to bring economy back on growth track.
If anything more kindly share, Thank you
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Looking for a proper theoretical framework to anchor corporate diversification and performance of deposit money banks in sub Sahara africa
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The previous answers are interesting. I am not certain my answer will help you; however, it sounds like economies of scale and scope might be an option for you to consider. The literature is in enough depth for one to see several options.
Although you can find our journal article on it via ResearchGate, I would encourage you to look at Jeffery A. Clark's work. The easy way to find Clark's extensive review of the literature it is to use a Google search on Economies of Scale and Scope in Kansas Banking; it will be among the top ones listed. I hope this helps.
Rob
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Which country is the best for immigration?
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Please which country is best for a young animal scientist to pursue his doctoral degree with high chances of job after study?
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With aggressive promotion of cashless economy, electronic payments & reduced cash usage, RBI will lose the seigniorage revenue. Seigniorage is a very small share of the RBI’s net worth (about 6%) but a substantial share of its cash income, almost 100% at this juncture. Can it be compensated from some other source? True, less cash will reduce the RBI's liabilities but issued currency is a non-interest bearing liability whereas seigniorage is actual cash income. 
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Even in a cashless world, electronic money hinges ultimately on accounts with the central bank as the ultimate clearing instrument. In my view printing currency notes and letting them circulate will create the same amount of seigniorage for the central bank as if the identical amount is granted to an economic agent in the form of an (electronic) account with the central bank. Only if the total demand for central bank money ( in the form of cash plus electronic deposits) is affected by the abolition of cash will this affect the amount of seigniorage. 
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I am doing a study on factors influencing students' choice of retail bank. The study aims to find out factors students consider when selecting the services of a retail bank. My dependent variable is: bank selection and my independent variables are: proximity, service quality and technological services. My supervisor keeps asking me  the type of my Ivs and I am not sure about that. I would appreciate if you could help me with that.
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You need to decide if the technology level is a continuous variable showing service available or just a binary variable determining that services are above a level of cutoff. Similarly you can choose different types of IVs. Like Nguyen's selection you should also look at other literature for other factors than these three and what would capture the event of bank selection completely. You might also get to some latent variables that you use in your equation or use to control the environment for your selected IVs
For example, SERVQUAL and Technology adoption are well established latent constructs with 5-6 dimensions respectively in the Banking Services investigations related literatures in IS or Marketing. 
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How Basil norms will prove its effectiveness?
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Dear Sayed
Greetings,
Please see attached  file about your topic may be useful for you. 
Best Regards
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I am looking for ready database or raw data to calculate:
1) the percentage of banking asset to the total financial sector asset for a particular country?
2) banking asset as a percentage of GDP of a particular country?
TQ for any response. Really appreciate it.
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I can't find anything other than the Fed of St. Louis.
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Dear J. P. Amor
You can find any data from webpage of bank stock exchange or central bank report and statistical report,
Best Regards, 
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Complementary and/or virtual currencies are diffusing especially in Europe after 2008. At the same time, In Iceland and Finland the debate about monetary sovereignty seems politically relevant. Notwithstanding, I did not find news about the regulation of complementary and/or virtual currencies in those countries. 
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Dear Stefano,
I, as well, have not heard anything concerning virtual currencies in Iceland and Finland. Though, with respect to the "social legitimacy" and "sovereignty" of such currencies, I did find this article to be of reputable assistance.
Yours,
David
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What definition is appropriate for neo-banking?
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Dear David I did not know the notion of neo-banking. So I checked in the web and I found an interesting definition at the following link
As you will see  neo-bank is defined as "an institution that provides checking, a prepaid debit card and some form of savings account without the traditional brick-and-mortar building. This usually includes features like mobile deposits, P2P payments, mobile budgeting tools and real-time digital receipts. In the U.S., these institutions are – directly or indirectly – FDIC insured."
Neo-banking provide easy and simple account start-up with strong digital support, and exceptional  customer support. You do your banking via smart phones, at ATMs, or at locations like Wal-Mart or 7-Eleven.
Regarding your question, I think it could be right understanding this new phenomenon by using the theory of endogenous money. We should check it in countries where neo-banking is diffused, we have a higher velocity of circulation of money, and if the presence of neo-banking is demand driven.  
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After all, US fed lending totaled 2 trillion dollars through the discount window, at nearly zero interest...in addition to quantitative easing...
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I agree inflation can be the result of sufficiently large deficits. On the other hand, there is no guarantee that possible inflationary effects will completely and exactly offset real gains in capacity utilization, output, and growth, except under implausible “Ricardian” assumptions. Moreover, a complete model of inflation will of course contain multiple variables.
But in conditions of moderate to high unemployment, high deficits do in my view tend to increase the growth rate, though as you point out, there is no guarantee of this outcome in all business-cycle conditions. I mentioned the standard but important slack-resources argument that appears in most versions of Keynesian theory. Think also of skill-deterioration hysteresis and the argument that (innovation-embodying) investment systematically falls behind as a result of weakness during periods of weak aggregate demand. In fact, taking the reasonable step of including capacity utilization in the investment function leads to straightforward results of the latter type. Finally, of course, higher growth improves tax revenues. These latter points on inflation are indeed a matter of degree or a frequency along the spectrum and seem neither necessary nor sufficient for MMT.
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How then can large sales of credit default swaps be manifestations of creditworthiness? Moreover, why would any investor want to purchase a credit default swap if the intention is to not profit of future default of the reference loan? Is the motivation then an effect stemming from expectations of asset price inflation? e.g. bond prices going up?
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It is out of question that the CDS  derivatives are connected with credit risk measure and  perception and, therefore , they can be utilized as  evaluation and/or risk protection tools.  However ,  for their  inherent speculative nature, and the dimensional structure of the OTC derivatives market,  it is not always easy, in my opinion, to clear out  the scene from the speculative part of this type of transaction. I would not compare precisely the risk evaluations made in the insurance Market with the ones made in the OTC one! If you track a trend and you sell and buy basing your decisions  on the technical analysis suggested by your  trading system,  you do not consider the creditworthiness directly but more precisely also some speculative effects of it. To clear  the evaluation of creditworthiness from distortive betting effects it is not always possible, in my opinion, as the speculative betting content of the CDS transactions, might sometimes alter improperly the picture.
Kind regards
Alberto
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What significant role does this play in real as opposed to fictitious accumulation of capital?
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@Arjun,
Indeed, by definition.  
To David's question, I am sure Marx would have been amazed and enthralled by Stephen Marche's piece http://lareviewofbooks.org/essay/literature-second-gilded-age/
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Or is a world-historical paradigmatic lens more appropriate?
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I am rather doubtful if VOC approach (Hall and Soskice type) has anything concrete to analyse global financialization. I will explain in the subsequent post that VOC approach has a serious theory defect that prevents it analyse and examine globalization phenomenon.
Financialization has been a big topic for Regulationists since 1980's, for they considered finacialization as successor to Fordist regime of accumulation.  They have many books and papers on this theme.
It will be helpful and informative for you to read a review paper like van der Zwan's  
STATE OF THE ART: Making sense of financialization. Socio-Economic Review (2014) 12: 99–129. (see the link below)
It contains major survey on three major approaches: accumulation approach, share value approach and everyday life approach.  
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Is it fair to assume we have now crossed the rubicon and things are more tune with steady progress now and for another decade or more to come? While AIG and GM seem to need more help in the USA, banks have been building new markets. European banks of course seem to be hit because of the lack of viable collateral and fast closing avenues of fresh equity. Also maybe the use of Contingent Capital is not fair and Europe is actually headed for more trouble within banking?
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Your assumption that banks have resiliently adapted might be a bit optimistic. There is still a lot of work to do and not all banks have managed to consistently pass their stress tests. Check out the FRB CCAR page for details. The issue with advancing new credit in any market is the balance between threshold return levels and risk of default -- or other loss factor. Clear property rights, shorter tenor credit advances, and good quality collateral that is not positively correlated to the direction of risk are essential.
Also don't forget that with the internet, reputation is key to growing new market capaclty. So look to issues of cyber threats, intellectual and other property rights and corruption as reasons to not enter markets.
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Money Transfer Monopolies
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As an Bdonomist like to agree with fellow scholars that mobile money is posing a serious challenge on the banking industry. the revenue banks could have been getting is being syphoned by the mobile money operators. 
It is a work up call to banks to start mobile banking before they can witness the closure of bank. Meanwhile banks have been in this indusrty for a long time and with perfect competition they should be ready to introduce most efficient mobile money
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Everyone seems to quote 'market cap' (price*total volume) but this seems to be of pretty limited value, particularly if you want to have a measure of the relative utility or use of a cryptocurrency. Can anyone suggest some alternative metrics? It seems that there's an entire field here yet to be developed.
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At this stage in the (very limited) maturity of cryptocurrencies, I usually look at exchange volume. Obviously, a CC isn't much use unless it's liquid. One thing that makes me uncomfortable about this approach is that I don't really understand why people are buying the CC they are (in the sense that every femto-satoshi exchanged has both a seller and a buyer.) Market Cap doesn't have much functional meaning, and is distorted by pre-mined CC.
The trade-volume approach leads one to think Bitcoin and probably Litecoin (about 1/4 of Btc volume) are viable, but Dogecoin is way down (usually around 1/10 of Ltc) , and past that it's all noise.
Until the regulatory environment is figured out, all CC are going to be volatile.
Since blockchains are public, there are some interesting *data* mining opportunities, though it doesn't seem like there's been much sustained or academic interest in this so far.
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How can we know that a banking system is overbanked?
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In some ways this is a very odd question. First, what is the definition of "need" in the case of the "system" (financial system? the economy as a whole?) I presume you mean banks rather than bank branches (which unfortunately makes Dr Rajan's proposed measure problematic). The number of banks in relation to anything may be difficult to interpret. The US has almost 7000 institutions that report to the FDIC and these banks have some 90,000 offices. However, the concentration of deposits is high with three banks accounting for over 30% of all bank deposits. Is that too many banks? or too few? or both? One could argue that concentration of banks is a problem (too big to fail) and more banks might reduce that risk. Large concentrated banks might focus on capital market activities of large firms or governments and neglect small firms The availability of credit might have little to do with the number of banks at all but the overall stance of monetary policy or regulatory policy. To me, this is a highly complex issue that needs to be refined before it can be usefully answered.