Skip to main content
Business tools being used to make and asses calculations and risks

Central Bank Digital Currency (CBDC): Uncertainty and Attention Indices

Published: 25 January 2024

Dr. Larisa Yarovaya, Director of the Centre for Digital Finance at the Southampton Business School, collaborated with a number of academics to develop a series of news-based cryptocurrency indices using a big data approach. 

The team of academics included Dr. Yizhi Wang (Cardiff University), Prof. Brian Lucey (Trinity College Dublin), and Prof. Sam Vigne (Luiss University) 

They used 660 million news stories from LexiNexis news and Business to design  The Central Bank Digital Currency Uncertainty Index (CBDCUI) and CBDC Attention Indices (CBDCAI). Updated quarterly, these serve as a barometer for regulators, policymakers, and  the media to track the evolution of CBDCs in the new digital currency era. 

Experimental tests were used to explore the behaviour of CBDC indices in relation to various financial indicators, including:

  • cryptocurrency markets
  • popular uncertainty measures
  • stock markets
  • banking sectors
  • bond markets
  • exchange rate
  • gold. 

The findings reveal that CBDC indices significantly influence the volatilities of different financial variables, showcasing both positive and negative effects. Notably, the study underscores the importance of CBDC uncertainty in the interconnected financial system.

The results suggest that CBDC uncertainty plays a more critical role in shaping financial markets. Positive government policies can reduce uncertainty, but the study identifies significant volatility spikes during key CBDC innovations and digital currency events. The methodology employed in the research, utilising internet literature database archives, contributes to the literature by demonstrating an effective approach to developing new financial indices.

The paper emphasizes the global significance of CBDCs in transforming the monetary system, affecting daily payment modes, societal payment systems, the commercial banking structure, and capital markets. The authors anticipate significant local and international impacts of CBDCs on competition in the payments and fintech sector.

The developed indices have garnered widespread attention from the academic community and the media. In 2023, Dr. Larisa Yarovaya delivered two keynote talks on cryptocurrency uncertainty and CBDC at international academic conferences. The first talk took place at the 4th International Conference on Corporate Governance and Risk Management in Financial Institutions (CGRM 2023) on March 23-24, 2023, at the University of Foggia, Copernico, Rome, Italy. The second keynote was presented at the "Fintech for the Future" workshop on 13-14 April 2023, organised by the Future Finance and Economics Association and Ghent University in Ghent, Belgium.

Furthermore, Dr. Yarovaya contributed to policy consultation by responding to the call for evidence on 'The Central Bank Digital Currencies (CBDC)' by The House of Lords Economic Affairs Committee, chaired by Lord Forsyth of Drumlean. 

In November 2023, Dr. Larisa Yarovaya participated in the Financial Times Global Banking Summit in London. During the summit, she joined a panel of industry experts, including Mike Alonso (BIS), Soren Mortensen (IBM), and Animesh Ghosh (Currency Network), for a compelling discussion with Joshua Franklin (FT) on the future of CBDC. Additionally, she delivered a masterclass titled "Designing a Digital Currency”. 

The CBDC uncertainty tsunami isn't just shaking up Fintech; it's sending shockwaves through traditional financial markets, making them more vulnerable to crypto contagion.
Associate Professor of Finance

Larisa has been appointed to Stanford's top 2% of Global Scientists list, attaining the 12 spot in Finance in the UK and 168 globally.  Her first paper was only published in 2016  which highlights the importance of the impact of her fintech research so far.

Other digital asset indices created by the same team, include Cryptocurrency Price and Policy Uncertainty (UCRY) and the Index of Cryptocurrency Environmental Attention (ICEA).  These provide valuable data and tools for researchers, investors, policymakers, and anyone with an interest in the dynamic landscape of digital currencies.

Related publications

Yizhi Wang,
Brian Lucey,
Samuel Vigne,
, 2022 , Technological Forecasting and Social Change , 180
Type: article
Yizhi Wang,
Brian Lucey,
Samuel Vigne,
, 2022 , China Finance Review International
Type: article
Brian M. Lucey,
Samuel Vigne,
& Yizhi Wang
, 2021 , Finance Research Letters
Type: article
to top