Central bank digital currency and bank intermediation: Medium of Exchange vs. Savings vehicle

descriptionPublicationkeyboard_double_arrow_right Article 01 Jan 2022 Switzerland English Publisher:Elsevier BVJournal:European Economic Review, volume 170, page 104,890 (issn: 0014-2921,

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Authors: Remo Nyffenegger;

doi: 10.1016/j.euroecorev.2024.104890 , 10.2139/ssrn.4055352

Central bank digital currency and bank intermediation: Medium of Exchange vs. Savings vehicle

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Abstract

This paper analyzes the effects of a retail central bank digital currency (CBDC) on bank intermediation within a general equilibrium model and provides a quantitative assessment. In the model, banks offer both transaction and savings deposits. This allows to study how a CBDC's impact varies based on its usage as a medium of exchange or as a savings vehicle. When a CBDC is used as a savings vehicle that competes with savings deposits, the level of disintermediation almost doubles compared to a scenario where the CBDC is used solely for transactions and competes only with transaction deposits.

Country

Switzerland

Related Organizations

University of Basel
Switzerland

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