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The Economics of Central Bank Digital Currency

Author

Listed:
  • Toni Ahner

    (European Central Bank, CEPR)

  • Katrin Assenmacher

    (European Central Bank)

  • Peter Hoffmann

    (European Central Bank)

  • Agnese Leonello

    (European Central Bank)

  • Cyril Monnet

    (University of Bern and Study Center Gerzensee)

  • Davide Porcellacchia

    (European Central Bank)

Abstract

This paper provides a structured overview of the burgeoning literature on the economics of central bank digital currency (CBDC). We document the economic forces that shape the rise of digital money and review motives for the issuance of CBDC. We then study the implications for the financial system and discuss a number of policy issues and challenges. While the academic literature broadly echoes policymakers’ concerns about bank disintermediation and financial stability risks, it also provides conditions under which such adverse effects may not materialize. We also point to several knowledge gaps that merit further work, including data privacy and the study of end-user preferences for attributes of digital payment methods.

Suggested Citation

  • Toni Ahner & Katrin Assenmacher & Peter Hoffmann & Agnese Leonello & Cyril Monnet & Davide Porcellacchia, 2024. "The Economics of Central Bank Digital Currency," International Journal of Central Banking, International Journal of Central Banking, vol. 20(4), pages 221-274, October.
    • Handle: RePEc:ijc:ijcjou:y:2024:q:4:a:4
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    References listed on IDEAS

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    1. Bindseil, Ulrich & Marrazzo, Marco & Sauer, Stephan, 2024. "The impact of central bank digital currency on central bank profitability, risk-taking and capital," Occasional Paper Series 360, European Central Bank.

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