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Central bank digital currency in an open economy

Massimo Ferrari Minesso (), Arnaud Mehl () and Livio Stracca ()

Journal of Monetary Economics, 2022, vol. 127, issue C, 54-68

Abstract: A two-country DSGE model with central bank digital currency (CBDC) is derived and used to analyze the open-economy implications of CBDC for the transmission of shocks, optimal monetary policy and welfare. The presence of a CBDC amplifies the international spillovers of shocks and increases international linkages. The magnitude of the effects depends crucially on the design of CBDC. Moreover, issuance of a CBDC by one economy increases asymmetries in the international monetary system by reducing monetary policy autonomy and welfare in the other economy.

Keywords: Central bank digital currency; DSGE model; Open-economy; Optimal monetary policy; International monetary system (search for similar items in EconPapers)
JEL-codes: E50 F30 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Central bank digital currency in an open economy (2020) Downloads
Working Paper: Central bank digital currency in an open economy (2020) Downloads
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DOI: 10.1016/j.jmoneco.2022.02.001

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