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Central bank digital currency and monetary policy: a literature review

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  • Beniak, Patrycja

Abstract

Rapid digitalisation of payments leads to greater cost and time efficiency, yet could also potentially trigger legal and security challenges as well as lead to weakening of finan- cial stability and less effective monetary policy transmission. In order to ensure greater safety, central banks are contemplating and testing solutions thanks to which public using payment innovations could transact in funds that are ultimately backed by central bank. One of these solutions is central bank digital currency, a digital version of cash. The pro- posed versions of central bank digital currency are very diverse. Depending on the version assumed by a particular central bank, central bank digital currency can have an impact on central bank interest rate setting, monetary policy implementation and transmission mechanism. This relates most notably to effective lower bound which could either rise or fall, conditional on design on central bank digital currently.

Suggested Citation

  • Beniak, Patrycja, 2019. "Central bank digital currency and monetary policy: a literature review," MPRA Paper 96663, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:96663
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    File URL: https://mpra.ub.uni-muenchen.de/96663/1/MPRA_paper_96663.pdf
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    References listed on IDEAS

    as
    1. Tanai Khiaonarong & David Humphrey, 2019. "Cash Use Across Countries and the Demand for Central Bank Digital Currency," IMF Working Papers 19/46, International Monetary Fund.
    2. Michal Franta, 2018. "The Likelihood of Effective Lower Bound Events," Working Papers 2018/3, Czech National Bank.
    3. Noriyuki Yanagawa & Hiromi Yamaoka, 2019. "Digital Innovation, Data Revolution and Central Bank Digital Currency," Bank of Japan Working Paper Series 19-E-2, Bank of Japan.
    4. Michael D. Bordo & Andrew T. Levin, 2017. "Central Bank Digital Currency and the Future of Monetary Policy," NBER Working Papers 23711, National Bureau of Economic Research, Inc.
    5. Walter Engert & Ben Fung, 2017. "Central Bank Digital Currency: Motivations and Implications," Discussion Papers 17-16, Bank of Canada.
    6. repec:mes:challe:v:30:y:1987:i:5:p:10-17 is not listed on IDEAS
    7. Tommaso Mancini Griffoli & Maria Soledad Martinez Peria & Itai Agur & Anil Ari & John Kiff & Adina Popescu & Celine Rochon, 2018. "Casting Light on Central Bank Digital Currencies," IMF Staff Discussion Notes 18/08, International Monetary Fund.
    8. James Tobin, 1987. "A Case for Preserving Regulatory Distinctions," Challenge, Taylor & Francis Journals, vol. 30(5), pages 10-17, September.
    9. Ruchir Agarwal & Miles Kimball, 2015. "Breaking Through the Zero Lower Bound," IMF Working Papers 15/224, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    virtual currencies; central bank digital currency; monetary policy; effective lower bound;

    JEL classification:

    • 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
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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