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CBDC and the operational framework of monetary policy

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  • Abad, Jorge
  • Nuño, Galo
  • Thomas, Carlos

Abstract

We analyze the impact of central bank digital currency (CBDC) on the operational framework of monetary policy and the macroeconomy. We develop a New-Keynesian model with a frictional interbank market, central bank deposit and lending facilities, and household preferences for different liquid assets, calibrated to the euro area. CBDC adoption implies a contraction in bank deposits, which is absorbed by a fall in reserves and, if large enough, increased recourse to central bank credit. The resulting changes in the operational framework (from ‘floor’ to ‘corridor’, and then to ‘ceiling’) thus shape the impact of CBDC on credit, investment and output.

Suggested Citation

  • Abad, Jorge & Nuño, Galo & Thomas, Carlos, 2025. "CBDC and the operational framework of monetary policy," Journal of Monetary Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:moneco:v:151:y:2025:i:c:s0304393225000339
    DOI: 10.1016/j.jmoneco.2025.103762
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    2. Lorenzo Burlon & Manuel A. Muñoz & Frank Smets, 2024. "The Optimal Quantity of CBDC in a Bank-Based Economy," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(4), pages 172-217, October.
    3. Murakami, David & Viswanath-Natraj, Ganesh, 2025. "Cryptocurrencies in emerging markets: A stablecoin solution?," Journal of International Money and Finance, Elsevier, vol. 156(C).
    4. Bindseil, Ulrich & Senner, Richard, 2024. "Macroeconomic modelling of CBDC: a critical review," Working Paper Series 2978, European Central Bank.
    5. Caccia, Enea & Tapking, Jens & Vlassopoulos, Thomas, 2024. "Central bank digital currency and monetary policy implementation," Occasional Paper Series 345, European Central Bank.
    6. Hemingway, Benjamin, 2025. "The role of central bank digital currency in an increasingly digital economy," Journal of Economic Dynamics and Control, Elsevier, vol. 179(C).
    7. Sebastian Infante & Kyungmin Kim & Anna Orlik & André F. Silva & Robert J. Tetlow, 2023. "Retail Central Bank Digital Currencies: Implications for Banking and Financial Stability," Finance and Economics Discussion Series 2023-072, Board of Governors of the Federal Reserve System (U.S.).
    8. Altavilla, Carlo & Boucinha, Miguel & Burlon, Lorenzo & Adalid, Ramón & Fortes, Roberta & Maruhn, Franziska, 2026. "Stablecoins and monetary policy transmission," Working Paper Series 3199, European Central Bank.
    9. Catalin Dumitrescu, 2025. "CBDC Stress Test in a Dual-Currency Setting," Papers 2511.13384, arXiv.org, revised Dec 2025.
    10. Georgakas, Ioannis, 2025. "Central Bank Digital Coins (CBDCs) and Monetary Sovereignty: Opportunities and Risks in the European Context," MPRA Paper 124457, University Library of Munich, Germany.
    11. Ferrari Minesso, Massimo & Siena, Daniele, 2026. "Private money and public debt. U.S. Stablecoins and the global safe asset channel," Working Paper Series 3174, European Central Bank.
    12. Alberto Di Iorio & Anneke Kosse & Ilaria Mattei, 2024. "Embracing diversity, advancing together - results of the 2023 BIS survey on central bank digital currencies and crypto," BIS Papers, Bank for International Settlements, number 147.
    13. Ilya N. Gurov & Ivan V. Devyatov, 2025. "Digital Ruble: What Awaits Consumers of Financial Services?," Population and Economics, ARPHA Platform, vol. 9(3), pages 173-197, October.
    14. Ozili, Peterson K, 2024. "Thinking Fast and Slow about Central Bank Digital Currencies," MPRA Paper 120774, University Library of Munich, Germany.
    15. Dirk Niepelt, 2025. "Central Bank Digital Currency and Monetary Architecture," Diskussionsschriften dp2509, Universitaet Bern, Departement Volkswirtschaft.
    16. Magin, Jana Anjali & Neyer, Ulrike & Stempel, Daniel, 2025. "Cash or Cache? Distributional and business cycle implications of CBDC holding limits," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 101(C).

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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • 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
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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