Central Bank Digital Currency: Welfare and Policy Implications

Stephen Williamson

No 386, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: A model of multiple means of payment is constructed to analyze the effects of the introduction of central bank digital currency (CBDC). The introduction of CBDC has three beneficial effects. It mitigates crime associated with physical currency, permits the payment of interest on a key central bank liability, and economizes on scarce safe collateral. CBDC admits another instrument of monetary policy, but may require that the central bank take on private assets in its portfolio if CBDC significantly displaces privately supplied means of payment.

Date: 2019
New Economics Papers: this item is included in nep-dge, nep-mon and nep-pay
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Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:386

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