CBDC and banks: disintermediating fast and slow

Rhys Bidder, Timothy Jackson and Matthias Rottner

No 1280, BIS Working Papers from Bank for International Settlements

Abstract: We examine the impact of a retail central bank digital currency, combining survey evidence from German households with a macroeconomic model featuring endogenous systemic bank runs. The survey reveals non-trivial demand for retail CBDC as a substitute for bank deposits in normal times ("slow disintermediation") and increased withdrawal risks during financial distress ("fast disintermediation"). Informed by the survey, the model indicates that introducing a retail CBDC might reduce financial stability because CBDC offers storage-at-scale - making it attractive to run to. We estimate an optimal holding limit which chokes off fast disintermediation and enhances financial stability by shrinking a fragile banking system.

Keywords: Central bank digital currencies; financial crises; disintermediation; bank runs; banking system; money (search for similar items in EconPapers)
JEL-codes: E42 E44 E51 E52 G21 (search for similar items in EconPapers)
Date: 2025-07
New Economics Papers: this item is included in nep-fmk, nep-mon and nep-pay
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