I. Global cash alternatives and their impact on the implementation of monetary policy Balázs István Horváth – Gábor Horváth The study presents what happens when the settlement asset of a country used in its national and international payments becomes non-domestically issued. The history of central banks’ emergence will be described briefly, which gives a big picture about the aspects that are crucial in establishing an economy’s monetary sovereignty and stability. A couple of instances are listed for the gradual marginalisation of a country’s conventional currency as it was replaced by a dominant foreign currency (dollarisation).3 Then the discussion will turn to the large technological corporations, referred to as Big Tech, that have a profound influence over society’s social and economic relations, and the potential forms of the global money alternatives offered by them as well as such money alternatives’ significance in the transformation of the current financial system. Based on the potential ways for the expansion of the settlement systems built on Big Tech’s existing platforms and digital ecosystems and countries’ traditional dollarisation experiences, a new concept, digital dollarisation, is described. An important consequence may be that the monetary sovereignty of certain nation states is undermined, as the role of the dominant currency is increasingly taken over by one or more global digital alternatives (e.g. Libra). The main hypothesis of the paper is that a potential response to the appearance of the global money alternatives is to create a central bank digital currency and ensure that it is used widely by people, in terms of the number and volume of transactions.
3
he primary sense in which the concept is used here does not cover the T conscious joining of a currency area.
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