Retail CBDC purposes and risk transfers to the central bank

Romain Baeriswyl, Samuel Reynard and Alexandre Swoboda
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Alexandre Swoboda: Graduate Institute Geneva

Swiss Journal of Economics and Statistics, 2024, vol. 160, issue 1, 1-15

Abstract: Abstract The issuance of retail central bank digital currency (CBDC) involves a transfer of risk from commercial banks to the central bank. Mechanisms that limit the transfer of risk, such as an unattractive interest rate, a quantity ceiling or the non-convertibility of cash and reserves into CBDC, are likely to discourage the use of CBDC as a medium of exchange and thus defeat the purpose of issuing CBDC.

Keywords: Central bank digital currency (CBDC); Fractional-reserve banking; Gresham’s law; Medium of exchange (search for similar items in EconPapers)
Date: 2024
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Working Paper: Retail CBDC purposes and risk transfers to the central bank (2021)
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DOI: 10.1186/s41937-024-00124-3

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