Central bank digital currency and bank intermediation: Medium of Exchange vs. Savings vehicle

Remo Nyffenegger

European Economic Review, 2024, vol. 170, issue C

Abstract: This paper analyzes the effects of a retail central bank digital currency (CBDC) on bank intermediation within a general equilibrium model and provides a quantitative assessment. In the model, banks offer both transaction and savings deposits. This allows to study how a CBDC’s impact varies based on its usage as a medium of exchange or as a savings vehicle. When a CBDC is used as a savings vehicle that competes with savings deposits, the level of disintermediation almost doubles compared to a scenario where the CBDC is used solely for transactions and competes only with transaction deposits.

Keywords: Central bank digital currency; Bank lending; Medium of exchange; Savings vehicle; New monetarism; Overlapping generations (search for similar items in EconPapers)
JEL-codes: E42 E50 E58 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:170:y:2024:i:c:s0014292124002198

DOI: 10.1016/j.euroecorev.2024.104890

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