The Impact of Cryptocurrencies on Traditional Financial Markets

Sreejith Kavungal Suresh

Master's thesis

Abstract:

This thesis delves into the reactions of central banks towards cryptocurrencies, exploring their strategies and responses amidst the emergence of decentralized financial alternatives. Employing a comprehensive study, the research illuminates the diverse approaches of central banks, ranging from cautious vigilance to proactive engagement, to uphold monetary policy in a rapidly evolving environment. The findings underscore the complexities inherent in this transition and highlight the imperative for regulatory adaptability. Notably, regulatory actions aimed at mitigating risks associated with cryptocurrencies have been instrumental in enhancing market transparency and bolstering investor confidence. Moreover, collaborative research endeavors and global partnerships have facilitated informed decision-making amidst uncertainty. The study unveils a multifaceted narrative of market dynamics, emphasizing the pivotal role of regulatory frameworks and institutional resilience in averting potential crises. However, it also acknowledges several limitations, including the focus on prominent cryptocurrencies within a specific timeframe and reliance on a single data source, CoinMarketCap.com. To address these limitations, future research should adopt a broader scope, incorporate multiple data sources, and explore qualitative and nonlinear modeling techniques. By addressing these limitations, future studies can provide more comprehensive insights for cryptocurrency stakeholders.

Keywords

Central banks, Cryptocurrencies, Traditional Financial System, Regulatory adaptability, Financial Market, Market dynamics, Risk management

Language used: English

Date on which the thesis was submitted / produced: 27. 5. 2024

Thesis defence

• Date of defence: 10. 6. 2024
• Supervisor: Ing. Florin Aliu, Ph.D.
• Reader: Ing. Jitka Brodská

Institute of Technology and Business in České Budějovice

Master programme / field:
Business Administration / Business Administration