Financial Stability Implications of CBDC

Francesca Carapella, Jin-Wook Chang, Sebastian Infante, Melissa Leistra, Arazi Lubis and Alexandros Vardoulakis
Additional contact information
Sebastian Infante: https://www.federalreserve.gov/econres/sebastian-infante.htm
Alexandros Vardoulakis: https://www.federalreserve.gov/econres/alexandros-vardoulakis.htm

No 2024-021, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: A Central Bank Digital Currency (CBDC) is a form of digital money that is denominated in the national unit of account, constitutes a direct liability of the central bank, and can be distinguished from other central bank liabilities. We examine the positive and negative implications for financial stability of a CBDC under different design options. We base our analysis on the lessons derived from historical case studies as well as on analytical frameworks useful to characterize the mechanisms through which a CBDC can affect financial stability. We further discuss various policy tools that can be employed to mitigate financial stability risks.

Keywords: CBDC; Financial stability; Runs; Stablecoins; Central bank liabilities; Regulation (search for similar items in EconPapers)
JEL-codes: E40 E50 G01 G21 G23 G28 (search for similar items in EconPapers)
Pages: 48 p.
Date: 2024-04-12
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eur, nep-fdg, nep-fmk, nep-mon and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2024-21

DOI: 10.17016/FEDS.2024.021

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