Digital Money, Default Risk, and Financial Information: An Experiment on Europe

Alessandro Castagnetti, Alessandra Cillo, Giuseppe Gurrado, Donato Masciandaro

No 26284, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: This paper examines whether information about issuer default risk shapes households' beliefs and choices among digital money issued by central banks, commercial banks, and non-bank private firms. We conduct a randomized survey experiment with 800 participants from France, Germany, and Italy. Participants report prior and posterior defaultrisk beliefs and complete nine stated payment choices in which issuer identity and interest compensation vary. Two treatments provide financial information about institutional differences in issuer risk, with one additionally presenting salient examples of financial distress. The treatments produce selective belief updating: they lower perceived centralbank default risk, leave commercial-bank beliefs largely unchanged, and raise perceived risk for non-bank private issuers. They also reduce selection of non-bank private digital money relative to both central-bank and commercial-bank alternatives. Under a structural random-utility model, participants require higher interest compensation to accept less-protected claims, revealing a differentiated hierarchy across issuer types: the required premium is higher for commercial-bank digital money than for a CBDC and substantially higher for non-bank private digital money. Assignment to either information treatment significantly increases the model-implied required annual interest-rate premium for commercial-bank digital money, with the increase approximately three times as large for non-bank private digital money.

Keywords: Central bank digital currency; digital euro; digital currencies; digital money; stablecoins; issuer identity; financial education; financial literacy; belief updating; default risk; willingness to accept; survey experiment. (search for similar items in EconPapers)
JEL-codes: C83 C93 D83 E41 E42 E58 G21 G28 G53 (search for similar items in EconPapers)
Pages: 59
Date: 2026
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