Digital Money and Central Banks Balance Sheet

Adrian Armas and Manmohan Singh

No 2022/206, IMF Working Papers from International Monetary Fund

Abstract: Digital money is a logical step in a process of continuous technological advancement in payment systems. In response, central banks are reviewing their conduct of monetary operations in light of the new shape of financial markets and systems. The impact of digital money will depend on the type of money substitution by digital money. The paper straddles several cases where substitution of CiC (currency in circulation), and bank deposits may take place via digital money such as CBDC or other e-money, and how it would impact the central bank balance sheet. Remuneration of CBDC, if aligned to a new objective, could potentially amplify the effect on the interest rate channel of monetary policy.

Keywords: CBDC; digital money; currency-in-circulation; bank deposits; central bank balance sheet; money base (M0); seigniorage; impact of digital money; dollarization level; central bank of Brazil; unit of account; central bank liability; Fiat currency; central bank FX; Digital currencies; Currencies; Central Bank digital currencies; Treasury bills and bonds; Global; Caribbean (search for similar items in EconPapers)
Pages: 29
Date: 2022-10-28
New Economics Papers: this item is included in nep-cba, nep-mon and nep-pay
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Citations: View citations in EconPapers (6)

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