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The Central Bank Digital Currency (CBDC) — Opportunity and Risks from an Islamic Perspective

In: ISLAMIC ECONOMIC INSTITUTIONS IN INDONESIA Are they Successful in Achieving the Maqasad-al-Shari’ah

Author

Listed:
  • Patria Yunita
  • Didik Permono

Abstract

This research proposes to analyze the Central Bank Digital Currency from an Islamic monetary perspective. This research examines the advancement of the volatility of cryptocurrency as the base money of the Central Bank Digital Currency. The assessment uses 7 computerized types of money and 12 stable coins and subsequently differentiates them and the capriciousness of gold expenses. We used Autoregressive Conditional Heteroscedasticity (ARCH) and Generalize Autoregressive Conditional Heteroscedasticity (GARCH). This system singled out the fact that the unusualness of the residuals is not steady, which causes heteroscedasticity in the data inspected. The data sources are the world gold council and coinmarketcap.com. The eventual outcomes of the assessment derive that the Tetha and International Lira were the most volatile cryptocurrencies compared to gold. Our analysis also concluded that even though this type of cryptocurrency is a metal-backed cryptocurrency, the volatility is quite high. Gold money has a long-term volatility of 67 times the volatility of gold, while E-Gold has 8 times the volatility of gold.

Suggested Citation

  • Patria Yunita & Didik Permono, 2023. "The Central Bank Digital Currency (CBDC) — Opportunity and Risks from an Islamic Perspective," World Scientific Book Chapters, in: Toseef Azid & Muhammad Syafii Antonio & Zafar Kayani & Murniati Mukhlisin (ed.), ISLAMIC ECONOMIC INSTITUTIONS IN INDONESIA Are they Successful in Achieving the Maqasad-al-Shari’ah, chapter 6, pages 83-108, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811272691_0006
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    More about this item

    Keywords

    Islamic Economics; Institutions; Maqasad al-Shari'ah; Islamic Capital Market; Shari'ah Entrepreneurship; Indonesia; Finance; Economics; International Finance; Corporate Finance; Islamic Finance;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • F3 - International Economics - - International Finance

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