Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/237717 
Year of Publication: 
2021
Series/Report no.: 
ECB Working Paper No. 2578
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We study the macroeconomic effects of central bank digital currency (CBDC) in a dynamic general equilibrium model. Timing and information frictions create a need for inside (bank deposits) and outside money (CBDC) to finance production. To steer the quantity of CBDC, the central bank can set the lending and deposit rates for CBDC as well as collateral and quantity requirements. Less restrictive provision of CBDC reduces bank deposits. A positive interest spread on CBDC or stricter collateral or quantity constraints reduce welfare but can contain bank disintermediation, especially if the elasticity of substitution between bank deposits and CBDC is small.
Subjects: 
Central bank digital currency
monetary policy
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JEL: 
E58
E41
E42
E51
E52
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4764-0
Document Type: 
Working Paper

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