A unified framework for CBDC design: remuneration, collateral haircuts and quantity constraints

Katrin Assenmacher, Aleksander Berentsen, Claus Brand and Nora Lamersdorf

No 2578, Working Paper Series from European Central Bank

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. JEL Classification: E58, E41, E42, E51, E52

Keywords: central bank digital currency; monetary policy; search and matching (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-cba, nep-dge, nep-isf, nep-mac, nep-mon and nep-pay
Note: 2721763
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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