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Central Bank Digital Currency:One, Two or None?

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  • Christian Pfister

Abstract

This paper investigates the real effects of short-term financial constraints in the light of the working capital channel: cash credit constraints may force SMEs to forgo investment opportunities in order to finance their working capital needs. Building on unique indicators of cash and investment credit constraints derived from survey data, I find that: (1) short-term credit constraints are as important as long-term ones in SMEs' investment decisions; (2) the detrimental effect of cash credit constraints on corporate investment is even stronger for firms with higher working capital needs; (3) the negative relationship between working capital and fixed investment is associated with short-term financial frictions; and (4) only liquid SMEs are able to offset short-term financial frictions by adjusting their accounts receivable and inventories.

Suggested Citation

  • Christian Pfister, 2019. "Central Bank Digital Currency:One, Two or None?," Working papers 732, Banque de France.
    • Handle: RePEc:bfr:banfra:732
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    References listed on IDEAS

    as
    1. C. Pfister, 2017. "Monetary Policy and Digital Currencies: Much Ado about Nothing?," Working papers 642, Banque de France.
    2. Aleksander Berentsen & Fabian Schär, 2018. "The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies," Review, Federal Reserve Bank of St. Louis, vol. 100(2), pages 97-106.
    3. Schmiedel, Heiko & Kostova, Gergana & Ruttenberg, Wiebe, 2012. "The social and private costs of retail payment instruments: a European perspective," Occasional Paper Series 137, European Central Bank.
    4. Émilie Candus & Christian Pfister & Franck Sédillot, 2017. "Where do French people invest their savings?," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 48, pages 5-22, Winter.
    5. Ben Fung & Hanna Halaburda, 2016. "Central Bank Digital Currencies: A Framework for Assessing Why and How," Discussion Papers 16-22, Bank of Canada.
    6. Kumhof, Michael & Noone, Clare, 2018. "Central bank digital currencies - design principles and balance sheet implications," Bank of England working papers 725, Bank of England.
    7. Christian Pfister, Natacha Valla, 2018. "‘New Normal’ or ‘New Orthodoxy’? Elements of a Central Banking Framework for the After-Crisis," Working papers 680, Banque de France.
    8. Christian Pfister, 2018. "(Real-)Time Is Money," Working papers 675, Banque de France.
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    Citations

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    Cited by:

    1. Watanabe, Akane & Yakita, Akira, 2023. "Effects of monetary transactions costs on economic growth," Research in Economics, Elsevier, vol. 77(2), pages 221-225.
    2. Pfister Christian, 2020. "The 100% Reserve Reform: Calamity or Opportunity?," Working papers 786, Banque de France.
    3. Anastasia Melachrinos & Christian Pfister, 2020. "Stablecoins: A Brave New World?," Working papers 757, Banque de France.
    4. Tercero-Lucas, David, 2023. "Central bank digital currencies and financial stability in a modern monetary system," Journal of Financial Stability, Elsevier, vol. 69(C).
    5. Marcelo A. T. Aragão, 2021. "A Few Things You Wanted to Know about the Economics of CBDCs, but were Afraid to Model: a survey of what we can learn from who has done," Working Papers Series 554, Central Bank of Brazil, Research Department.

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    More about this item

    Keywords

    : Central Bank; Currency; Digitalisation; Financial Stability; Monetary Policy.;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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