TITLE:
The Development of Blockchain-Based Digital Currencies and Their Impact on the Global Financial System
AUTHORS:
Guannan Liu
KEYWORDS:
Blockchain, Digital Currency, CBDC, Financial Innovation, Global Financial System
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.12 No.10,
October
23,
2024
ABSTRACT: Digital currencies are disrupting traditional financial concepts, garnering global attention. This theoretical study delves into blockchain-based digital currencies, analyzing their developmental trajectory and potential impact on the global financial landscape. By deconstructing the technological core of digital currencies, the research reveals how they challenge existing monetary system mechanisms. The paper focuses on Central Bank Digital Currency (CBDC) strategies across nations, extrapolating their potential effects on monetary policy formulation, cross-border transaction efficiency, and the development of inclusive finance. The study indicates that digital currencies have the potential to reshape the payment ecosystem, catalyze financial innovation, and enhance transaction efficiency, while simultaneously potentially triggering a series of regulatory challenges and financial stability risks. The article examines the potential impacts of digital currencies on traditional banking systems, monetary policy transmission mechanisms, and the international monetary system, and analyzes their potential in promoting financial inclusivity. Based on theoretical derivations, this paper proposes the construction of a new regulatory paradigm adapted to the digital currency era, including recommendations for improving legal frameworks, strengthening cross-border collaboration, and balancing privacy protection with regulatory requirements, aiming to strike a balance between financial innovation and system stability. The research provides a theoretical foundation for understanding the future development trends of digital currencies and their profound impact on the global financial system.