Implications of Central Bank Digital Currencies for Monetary Policy Transmission

By Mitali Das, Tommaso Mancini Griffoli, Fumitaka Nakamura, Julia Otten, Gabriel Soderberg, Juan Sole, Brandon Tan

September 15, 2023

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Format: Chicago

Mitali Das, Tommaso Mancini Griffoli, Fumitaka Nakamura, Julia Otten, Gabriel Soderberg, Juan Sole, and Brandon Tan. Implications of Central Bank Digital Currencies for Monetary Policy Transmission, (USA: International Monetary Fund, 2023) accessed November 17, 2024

Summary

This fintech note presents an analysis of the implications of central bank digital currency (CBDC) for monetary policy. In our framework, the implications of CBDC issuance on monetary policy are intermediated by its impact on key parts of the macroeconomic environment. The note also makes a distinction between “level effects”—whereby the introduction of CBDCs could tighten or loosen financial conditions as a shock—and “transmission effects,” whereby CBDCs change the impact of a given monetary policy shock on output, employment, and inflation. In general, the effects of CBDCs on monetary policy transmission are expected to be relatively small in normal times; however, these effects can be more significant in an environment with low interest rates or financial market stress.

Subject: Bank deposits, Central Bank digital currencies, Central bank policy rate, Central Banks, Economic sectors, Financial inclusion, Financial markets, Financial services, Open market operations, Technology

Keywords: Bank deposits, CBDC issuance, Central bank digital currencies, Central bank policy rate, Financial inclusion, FINTECH note, Global, IMF Fintech Note 2023/010, Monetary policy, Monetary policy transition, Monetary policy transmission, Open market operations

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Fintech Notes No 2023/010
Stock No:

FTNEA2023010
ISBN:

9798400252792
ISSN:

2664-5912

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