Central Bank Digital Currency and Cash: Choice Based on Baumol's Theory

Fengqi Xie () and Marina V. Ryzhkova ()
Additional contact information
Fengqi Xie: Tomsk State University
Marina V. Ryzhkova: Tomsk State University / Tomsk Polytechnic University

No 14416317, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: With the rapid growth of the digital economy, digital currency has emerged as a prominent area of research. Central Bank Digital Currency (CBDC), issued by the central bank and backed by its liability, has garnered significant attention. This article builds upon Baumol's money demand theory to conduct an extensive analysis of the factors influencing the choice between cash and CBDC, as well as the selection of currency usage. It finds that the decision to adopt either cash or CBDC is often driven by the lower holding costs associated with the latter. Additionally, various factors such as public perception, government policies, and social acceptance contribute to the prolonged coexistence of cash and CBDC. Although CBDC in their current state may not completely replace traditional currencies, they are projected to have a substantial impact on the future of financial transactions.

Keywords: Digitalization; central bank digital currency; CBDC; cash; Baumol's money demand theory (search for similar items in EconPapers)
Pages: 12 pages
New Economics Papers: this item is included in nep-fdg, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Proceedings of the Proceedings of the International Conference on Economics, Finance & Business, Paris, Nov -0001, pages 161-172

Downloads: (external link)
https://iises.net/proceedings/international-confer ... 44&iid=012&rid=16317 First version, 0000

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:14416317

Access Statistics for this paper

More papers in Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences
Bibliographic data for series maintained by Klara Cermakova ().