Arbeitspapier

Central bank digital currency and banking

This paper builds a model with imperfect competition in the banking sector. In the model, banks issue deposits and make loans, and deposits can be used as payment instruments by households. We use the model to assess the general equilibrium effects of introducing a central bank digital currency (CBDC). We identify a new channel through which the CBDC can improve the efficiency of bank intermediation and increase lending and aggregate output even if its usage is low, i.e., the CBDC serves as an outside option for households, thus limiting banks' market power in the deposit market. We then calibrate the model to the US economy and find that with a proper interest rate, CBDC can raise bank lending by around 7% and increase output by around 1%. The quantitative results are sensitive to parameters governing the acceptance of different means of payments and the degree of competition in the deposit market.

Sprache
Englisch

Erschienen in
Series: Bank of Canada Staff Working Paper ; No. 2019-20

Klassifikation
Wirtschaft
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Central Banks and Their Policies
Thema
Digital currencies and fintech
Monetary policy
Monetary policy framework
Market structure and pricing

Ereignis
Geistige Schöpfung
(wer)
Chiu, Jonathan
Davoodalhosseini, Mohammad
Jiang, Janet Hua
Zhu, Yu
Ereignis
Veröffentlichung
(wer)
Bank of Canada
(wo)
Ottawa
(wann)
2019

DOI
doi:10.34989/swp-2019-20
Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Chiu, Jonathan
  • Davoodalhosseini, Mohammad
  • Jiang, Janet Hua
  • Zhu, Yu
  • Bank of Canada

Entstanden

  • 2019

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