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
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (53)

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Related works:
Working Paper: Central bank digital currency in an open economy (2020)
Working Paper: Central bank digital currency in an open economy (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:127:y:2022:i:c:p:54-68

DOI: 10.1016/j.jmoneco.2022.02.001

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