Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229530
Authors: 
Niepelt, Dirk
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8712
Abstract: 
We analyze policy in a two-tiered monetary system. Noncompetitive banks issue deposits while the central bank issues reserves and a retail CBDC. Monies differ with respect to operating costs and liquidity. We map the framework into a baseline business cycle model with “pseudo wedges” and derive optimal policy rules: Spreads satisfy modified Friedman rules and deposits must be taxed or subsidized. We generalize the Brunnermeier and Niepelt (2019) result on the macro irrelevance of CBDC but show that a deposit based payment system requires higher taxes. The model implies annual implicit subsidies to U.S. banks of up to 0:8 percent of GDP during the period 1999-2017.
Subjects: 
reserves
deposits
central bank digital currency
monetary policy
Friedman rule
equivalence
Ramsey policy
bank profits
money creation
JEL: 
E42
E43
E51
E52
Document Type: 
Working Paper

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