Central bank digital currency and monetary policy: a literature review

Patrycja Beniak

MPRA Paper from University Library of Munich, Germany

Abstract: Rapid digitalisation of payments leads to greater cost and time efficiency, yet could also potentially trigger legal and security challenges as well as lead to weakening of finan- cial stability and less effective monetary policy transmission. In order to ensure greater safety, central banks are contemplating and testing solutions thanks to which public using payment innovations could transact in funds that are ultimately backed by central bank. One of these solutions is central bank digital currency, a digital version of cash. The pro- posed versions of central bank digital currency are very diverse. Depending on the version assumed by a particular central bank, central bank digital currency can have an impact on central bank interest rate setting, monetary policy implementation and transmission mechanism. This relates most notably to effective lower bound which could either rise or fall, conditional on design on central bank digital currently.

Keywords: virtual currencies; central bank digital currency; monetary policy; effective lower bound (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 G21 G28 (search for similar items in EconPapers)
Date: 2019-10-22
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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