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Central Bank Digital Currency, Credit Supply, and Financial Stability

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Issue Date
2022-01
Publisher
Ohio State University Press
Citation
Journal of Money, Credit and Banking
Abstract
© 2022 The Ohio State UniversityWe examine the implications of central bank digital currency (CBDC) for credit supply and financial stability using a monetary general equilibrium model. The introduction of deposits in CBDC account decreases credit supply by banks, raising the nominal interest rate and lowering a bank's reserve-deposit ratio. This increases the likelihood of bank panic in which banks exhaust cash reserves. However, once the central bank can lend all the deposits in CBDC account to banks, an increase in the quantity of CBDC which does not require reserve holdings can enhance financial stability by increasing credit supply and lowering nominal interest rate.
ISSN
0022-2879
URI
https://hdl.handle.net/10371/184126
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Appears in Collections:
College of Social Sciences (사회과학대학)Dept. of Economics (경제학부)Journal Papers (저널논문_경제학부)
College of Social Sciences (사회과학대학)Dept. of Economics (경제학부)Journal Papers (저널논문_경제학부)
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