Working Paper: CEPR ID: DP17617
Authors: Toni Ahnert; Katrin Assenmacher; Peter Hoffmann; Agnese Leonello; Cyril Monnet; Davide Porcellacchia
Abstract: This paper provides a structured overview of the burgeoning literature on the economics of CBDC. We document the economic forces that shape the rise of digital money and review motives for the issuance of CBDC. We then study the implications for the financial system and discuss of a number of policy issues and challenges. While the academic literature broadly echoes policy makers’ concerns about bank disintermediation and financial stability risks, it also provides conditions under which such adverse effects may not materialize. We also point to several knowledge gaps that merit further work, including data privacy and the study of end‐user preferences for attributes of digital payment methods.
Keywords: Monetary Policy; Financial Stability; Payments; Central Bank Digital Currency; Digital Money
JEL Codes: E41; E42; E51; E58; G01; G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| CBDC (E42) | bank disintermediation (G21) |
| bank disintermediation (G21) | credit supply (E51) |
| CBDC (E42) | banks' funding structure (G21) |
| banks' funding structure (G21) | lending capacity (G21) |
| CBDC (E42) | financial stability (G28) |
| CBDC remuneration (E42) | bank runs (E44) |
| CBDC remuneration (E42) | banks' deposit contracts (G21) |
| CBDC remuneration (E42) | bank stability (G28) |