Evaluating the Short-Term Economic Impacts of FinTech Innovations: A Focus on Cryptocurrencies and CBDCs

This research explores the short-term effects of FinTech innovations, specifically cryptocurrencies and CBDCs, on South Korea's financial market. Utilizing empirical data and a Vector Error Correction Model (VECM), the research analyzes key economic indicators including bank interest rates, financial stability, bank deposits, and money supply (M2). Results indicate that digital currencies lead to higher bank interest rates and improved financial stability but result in lower bank deposits and modifications to the money supply. The research simulates three scenarios to predict the outcomes of digital currency integration, highlighting its implications for banking and economic landscapes. The paper contributes to the Information Systems field by providing empirical evidence on the economic effects of digital financial innovations, offering insights for policymakers and financial institutions on navigating the evolving digital payment landscape.