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The e-krona and the macroeconomy

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  • Armelius, Hanna
  • Boel, Paola
  • Claussen, Carl Andreas
  • Nessén, Marianne

Abstract

In this article, we discuss potential implications of an e-krona for the conduct of monetary policy and for macroeconomic developments in general. We argue that a universally accessible, non-interest-bearing e-krona supplied according to demand would establish a zero interest-rate floor for the policy rate and possibly all other interest rates in the economy. The effect of quantitative easing can thereby also be reduced. Furthermore, it is unlikely that the monetary policy transmission mechanism would be strengthened by an e-krona. We also note that international financial flows may increase and induce more exchange rate volatility. Finally, an e-krona could have long-run level effects on economic activity. The effects would be positive if an e-krona improves the efficiency and the resilience of the payment system and negative if an e-krona impinges on the supply of credit and financial stability.

Suggested Citation

  • Armelius, Hanna & Boel, Paola & Claussen, Carl Andreas & Nessén, Marianne, 2018. "The e-krona and the macroeconomy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 3, pages 43-65.
    • Handle: RePEc:zbw:espost:232929
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    Cited by:

    1. Thitima Chucherd & Chanokkarn Mek-yong & Nalin Nookhwun & Passawuth Nuntnarumit & Natta Piyakarnchana & Suparit Suwanik, 2021. "Monetary and Financial Perspectives on Retail CBDC in the Thai Context," PIER Discussion Papers 152, Puey Ungphakorn Institute for Economic Research.
    2. Sarmiento, Adolfo, 2022. "Seven lessons from the e-Peso pilot plan: The possibility of a Central Bank Digital Currency," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(2).
    3. Jack Meaning & Ben Dyson & James Barker & Emily Clayton, 2021. "Broadening Narrow Money: Monetary Policy with a Central Bank Digital Currency," International Journal of Central Banking, International Journal of Central Banking, vol. 17(2), pages 1-42, June.
    4. Alexandra Mitschke, 2021. "Central Bank Digital Currencies and Monetary Policy Effectiveness in the Euro Area," Working Papers Dissertations 74, Paderborn University, Faculty of Business Administration and Economics.
    5. Bindseil, Ulrich, 2020. "Tiered CBDC and the financial system," Working Paper Series 2351, European Central Bank.

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    More about this item

    Keywords

    CBDC; monetary policy; macro economy;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • 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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