The Benefits
Fung and Halaburda argue that one of the main advantages of a Central Bank Digital Currency is greater retail payment system efficiency.
Central Bank Digital Currencies: A Framework for Assessing Why and How
Authors: Ben S. C. Fung, Hanna Halaburda
From: Bank of Canada
Barrdear and Kumhof use a DSGE model to show that an injection of Central Bank Digital Currency equal to 30{5e7f07e14add20b2e04f4edb85a447d3cd8121fc27b809645e9fed603c22cc5c} of GDP could permanently increase GDP by almost 3{5e7f07e14add20b2e04f4edb85a447d3cd8121fc27b809645e9fed603c22cc5c}.
The Macroeconomics of Central Bank Issued Digital Currencies
Authors: John Barrdear, Michael Kumhof
From: Bank of England – IMF
Koichiro Kamada suggests that a Central Bank Digital Currency can raise the efficacy of a negative interest rate policy if introduced in concert with positive tax rates on cash holdings.
The Transactions Demand for Paper and Digital Currencies
Author: Koichiro Kamada
From: Bank of Japan
What are Central Bankers saying…
One alternative currently being discussed is the introduction of electronic central bank money. There are several ways of achieving this: consumers can have an account either at the central bank itself or in a system controlled by the central bank. Another possible solution is for Norges Bank to issue a payment card or develop an app for consumers to use for anonymous payments. Which brings us to another question: which means of payment should be the statutory form of legal tender in Norway if we introduce electronic central bank money? Should it be banknotes and coins, or Norges Bank’s electronic money, or both?
Allowing the public to hold claims on the central bank [via the introduction of a central bank digital currency] might make their liquid assets safer, because a central bank cannot become insolvent. This is a feature which will become relevant especially in times of crisis – when there will be a strong incentive for money holders to switch bank deposits into the official digital currency simply at the push of a button. But what might be a boon for savers in search of safety might be a bane for banks, as this makes a bank run potentially even easier. But in taking deposits away from banks, it also removes their ability to engage in maturity and liquidity transformation and make loans.
Jens Weidmann, President of the Deutsche Bundesbank -June 2017
