Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265220 
Year of Publication: 
2022
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2022-26
Publisher: 
Bank of Canada, Ottawa
Abstract: 
We estimate the effect of Bitcoin ownership on the level of cash holdings of Canadian consumers. Bitcoin ownership positively correlates with cash holdings even after accounting for selection into ownership via a control function approach. On average, Bitcoin owners hold 83 percent (in 2018) to 95 percent (in 2017) more cash than non-owners. Focusing on the quantiles of cash holdings, we find that Bitcoin ownership has a highly nonlinear effect. For example, the difference in cash holdings between Bitcoin owners and non-owners in 2017 varies from 63 percent at the 25th quantile of cash to 176 percent at the 95th quantile of cash. Our results provide some evidence to reject the hypothesis that new digital currencies or technologies, such as Bitcoin, will lead to a decline in cash holdings.
Subjects: 
Bank notes
Digital currencies and fintech
Econometric and statistical methods
JEL: 
C12
E4
O33
O51
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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