Reserves For All? Central Bank Digital Currency, Deposits, and their (Non)-Equivalence
Dirk Niepelt ()
No 13065, CEPR Discussion Papers from C.E.P.R. Discussion Papers
I offer a macroeconomic perspective on the "Reserves for All" (RFA) proposal to let the general public use electronic central bank money. After distinguishing RFA from cryptocurrencies and relating the proposal to discussions about narrow banking and the abolition of cash I propose an equivalence result according to which a marginal substitution of outside for inside money does not affect macroeconomic outcomes. I identify key conditions on bank and government (central bank) incentives for equivalence and argue that these conditions likely are violated, implying that RFA would change macroeconomic outcomes. I also relate my analysis to common arguments in the discussion about RFA and point to inconsistencies and open questions.
Keywords: CADcoin; CBDC; e-krona; e-Peso; Fedcoin; J Coin; narrow banking (search for similar items in EconPapers)
JEL-codes: E42 E51 E58 E61 E63 H63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-pay
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Journal Article: Reserves for All? Central Bank Digital Currency, Deposits, and Their (Non)-Equivalence (2020)
Working Paper: Reserves for All? Central Bank Digital Currency, Deposits, and their (Non)-Equivalence (2018)
Working Paper: Reserves For All? Central Bank Digital Currency, Deposits and their (Non)-Equivalence (2018)
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