Central Bank Digital Currency in Brazil

Joao De Mello and Isabella Kanczuk-Alfaro ()
Additional contact information
Isabella Kanczuk-Alfaro: Milton Academy

Czech Journal of Economics and Finance (Finance a uver), 2022, vol. 72, issue 3, 242-264

Abstract: We calibrate to the Brazilian economy a model of means of payment choice, where households have different preferences over anonymity. The financial sector is monopolistically competitive and may break the link between borrowing and lending rates. A sufficiently attractive digital currency reduces holdings of both cash and bank deposits. Since cash use is costly, digital currency may increase welfare. However, if banks are liquidity constrained, the digital currency may result in fewer loans and output and reduce welfare. The digital currency interest remuneration can be set and adjusted over time to balance this trade-off optimally.

Keywords: digital currency; central bank; financial intermediation (search for similar items in EconPapers)
JEL-codes: E41 E58 G21 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journal.fsv.cuni.cz/mag/article/show/id/1505 (application/pdf)

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:fau:fauart:v:72:y:2022:i:3:p:242-264

Access Statistics for this article

More articles in Czech Journal of Economics and Finance (Finance a uver) from Charles University Prague, Faculty of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Natalie Svarcova ().