New Publication by Remo Nyffenegger in European Economic Review
"Central bank digital currency and bank intermediation: Medium of Exchange vs. Savings vehicle"
in: European Economic Review, Volume 170, November 2024, 104890
Abstract:
This paper analyzes the effects of a retail central bank digital currency (CBDC) on bank intermediation within a general equilibrium model and provides a quantitative assessment. In the model, banks offer both transaction and savings deposits. This allows to study how a CBDC’s impact varies based on its usage as a medium of exchange or as a savings vehicle. When a CBDC is used as a savings vehicle that competes with savings deposits, the level of disintermediation almost doubles compared to a scenario where the CBDC is used solely for transactions and competes only with transaction deposits.