What is it about?
This discourse delves into the policies and whitepapers of cross-border Central Bank Digital Currencies (CBDC), framed by advanced economies and monetary unions. The discourse analyses policies of respective entities comprising governments, central banks, and monetary unions, using R codes on the policy corpus. The analyses conducted for each entity identify their sentiment (positive/negative), polarity (degree of sentiment), valence (polarity weights), distribution of polarity, and financial bend. The sentiment of the entities is determined through NRC emotion lexicon and the financial bend of the entities is identified through unique financial words vis-à-vis the Loughran-McDonald Master Dictionary (LMMD) lexicon. A comparative analysis between each entity is performed to find their Jaccard Similarity (JS) index. A normality test for each policy corpus using the Jarque–Bera (JB) test is performed. The JB test identifies that each entity has a differing sentiment score and none of the sentiment and emotion scores are normally distributed. The results of the financial bend in the CBDC policies identify that the policy corpus of each entity predominantly contains non-polar neutral statements. However, the varying degrees of polarity among the entities, their polarity distribution pattern, their financial bend, and their JS index identify that the entities are making significant efforts in framing restrained but optimistic and inclusive policies.
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Why is it important?
This study is important for several reasons: 1. **Understanding Cross-Border CBDC Policy Dynamics:** As Central Bank Digital Currencies (CBDCs) gain traction globally, understanding the policy landscape, especially for cross-border transactions, is crucial. This study examines policies from advanced economies and monetary unions, offering insights into how different entities are approaching the implementation and regulation of cross-border CBDCs. 2. **Sentiment and Financial Bend Analysis:** By analyzing sentiment, polarity, and financial bend using robust lexicons (NRC emotion lexicon and Loughran-McDonald Master Dictionary), the study provides a nuanced understanding of the underlying emotions and financial intentions behind CBDC policies. This can help policymakers and financial analysts anticipate market reactions and strategic directions. 3. **Comparative Analysis and Policy Harmonization:** The comparative analysis using Jaccard Similarity (JS) index reveals the degree of policy alignment or divergence among entities. This information is vital for international organizations and policymakers striving for regulatory harmonization, which is essential for efficient cross-border CBDC transactions. 4. **Innovative Methodological Approach:** The use of advanced text analysis techniques, including sentiment analysis, polarity distribution, and the Jarque–Bera (JB) normality test, demonstrates an innovative approach to policy analysis. This methodology can be replicated in other policy domains, enhancing analytical rigor and objectivity. 5. **Insights into Policy Tone and Strategy:** The study finds that most policies are neutral with restrained optimism and inclusivity. This reflects a cautious yet forward-looking approach by policymakers, balancing innovation with risk management. Understanding this strategic tone can inform future policy development and stakeholder engagement. 6. **Contribution to Digital Currency Research:** By focusing on cross-border CBDC policies, the study contributes to the growing body of research on digital currencies, providing a foundation for further studies on international monetary collaboration, financial stability, and digital currency adoption. Overall, this study is valuable not only for policymakers and financial regulators but also for academics, international financial institutions, and private sector stakeholders involved in digital currency innovation and cross-border financial systems.
Perspectives
The perspectives of this study on cross-border Central Bank Digital Currencies (CBDC) policies can be viewed from multiple angles: 1. **Policy and Regulatory Perspective:** The study provides a comprehensive examination of the regulatory landscape for cross-border CBDCs. By analyzing the policies of governments, central banks, and monetary unions, it offers insights into how different jurisdictions are navigating the complexities of digital currency regulation, interoperability, and financial stability. This perspective is crucial for policymakers aiming to develop cohesive and harmonized international CBDC frameworks. 2. **Economic and Financial Perspective:** Through sentiment and financial bend analysis, the study uncovers the economic motivations and financial implications behind CBDC policy formulations. It highlights how advanced economies and monetary unions strategically communicate cautious optimism, reflecting a balanced approach to fostering innovation while managing systemic risks. This perspective is essential for understanding the macroeconomic impacts of cross-border CBDC adoption. 3. **Technological and Analytical Perspective:** The study employs advanced text analysis techniques using R codes, NRC emotion lexicon, Loughran-McDonald Master Dictionary, Jaccard Similarity (JS) index, and the Jarque–Bera (JB) normality test. This analytical approach demonstrates how computational linguistics and sentiment analysis can be leveraged for policy research, showcasing the power of technology in decoding complex policy narratives. 4. **Comparative International Perspective:** By comparing policies across different entities and analyzing their Jaccard Similarity (JS) index, the study explores the degree of alignment and divergence in cross-border CBDC policies. This international perspective is critical for stakeholders aiming to foster global cooperation, interoperability, and standardization in digital currency systems. 5. **Strategic Communication Perspective:** The finding that policies predominantly contain non-polar neutral statements with restrained optimism suggests a strategic communication approach by policymakers. It indicates an attempt to build public trust and manage stakeholder expectations while navigating uncertainties associated with digital currency deployment. This perspective can guide future communication strategies for financial innovations. 6. **Scholarly and Research Perspective:** The study contributes to the academic discourse on digital currency and financial technology by applying an interdisciplinary approach that integrates economics, policy analysis, and computational linguistics. It lays the groundwork for future research on policy sentiment analysis, international monetary cooperation, and the socio-economic implications of CBDC adoption. These perspectives collectively provide a holistic understanding of the strategic, economic, technological, and international dimensions of cross-border CBDC policies, making the study relevant for a wide range of stakeholders, including policymakers, financial institutions, international organizations, and academic researchers.
Kaushik Ghosh
Indian Institute of Foreign Trade
Read the Original
This page is a summary of: Central Bank Digital Currency: Policy Implications Through Polarity and Sentiment Analysis, January 2024, Springer Science + Business Media,
DOI: 10.1007/978-981-97-7532-3_6.
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