EJIST - European Journal of Interdisciplinary Studies

Our paper discusses the option of three EU countries – United Kingdom, Sweden and Denmark – of not joining the EMU and analyses whether besides their subjective option of staying out of the EMU there is also an economic reason behind this decision, based on existing literature in the field. The three “EMU-outsiders” are different in terms of economic power, financial market attributes, monetary policy rules employed and political decisions. In each case, the choice to remain outside EMU was based on economic reasons, as well as political and sometimes nationalist arguments. Of the three countries under scrutiny, Denmark is by far the one which has the best prospects of joining EMU, given its fixed exchange rate against the Euro, and United Kingdom the worst, particularly given the recent vote for Brexit. At the same time, the sovereign debt crisis that the EU and particularly the EMU had to confront between 2009 and 2011 has seriously threatened the eventual adoption of the common currency by these economies. Read more

Keywords:
European Monetary Union (EMU), Denmark, Sweden, United Kingdom, Brexit
JEL:
F33, F36, F45

Ever since the Global Financial Crisis, the financial system has seen an accelerated level of innovation. Bitcoin offered a decentralized alternative to money, with thousands of other cryptoassets quickly emerging. Most recently, Decentralized Finance (DeFi) promises to offer a new digital economy, with smart contracts replacing the need for financial intermediaries. This new market aims to reinvent traditional financial products in a more transparent and interoperable way. In this paper we aim to undertake an extensive literature review of the financial stability risks posed by the fast-growing DeFi market and assess these using the Financial Stability Board’s fintech framework. We find that DeFi could pose several challenges to traditional financial infrastructure, primarily by increasing interlinkages between cryptoassets and traditional financial markets. However, if DeFi evolves in a safe way, it could increase competition and financial inclusion with overall positive implications for financial stability. Read more

Keywords:
DeFi, financial stability, fintech, cryptoasset, cryptocurrency
JEL:
O30, C88, E44, G29