Casting Light on Central Bank Digital Currencies

Griffoli, Tommaso Mancini; Peria, Maria Martinez; Agur, Itai; Ratnovski, Lev; Kiff, John; Popescu, Adina; Rochon, Céline

doi:10.5089/9781484384572.006

Cited by 158 publications

(52 citation statements)

References 36 publications

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“…This solution ideally allows for the elimination of manufacturing and distribution costs linked to cash by ensuring -with appropriate state and central bank supervision -that no part of the population is under threat of being excluded from the financial system, as this would allow for the elimination of the monopoly of commercial banks and card companies in the field of electronic payments. Although we see numerous pilot and research projects examining the possibilities of implementation (Canada, China, Norway, Uruguay as per Mancini-Griffoli et al 2018), there are currently no practical examples of central bank digital currency today, with perhaps the plans of the Bank of Sweden in the most advanced phase (Söderberg 2018). The BIS (Barontini -Holden 2019) recently concluded an international survey on this topic, while the IMF (Khiaonarong -Humphrey 2019) published a comprehensive study on the same.…”

Section: Vision and Risks Of A Cashless Societymentioning

confidence: 99%

Comparative Analysis of the Changes in Cash Demand in Hungary

Végső¹

2020

Financial and Economic Review

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The strong growth of cash in circulation in Hungary seen in recent years seemingly contradicts the changes in payment habits and can also be interpreted to show that the development of the Hungarian payment system is falling behind relative to other countries in Europe. Placing the Hungarian data in an international context, this study attempts to provide a true and accurate picture of the situation with cash usage in Hungary and uses the relevant literature to present the trends in cash demand observed globally. One important conclusion is that, in terms of their nature, transactional cash demand and cash demand for savings purposes are clearly separated, with the latter primarily responsible for the expansion of the volume of cash on a global scale. While the growth seen in Hungary may be high in European comparison, taking into consideration changes in interest rate levels and GDP it cannot be seen as extreme. Based on international trends, the realistic goal for Hungary should primarily be to decelerate the expansion, as experiences show that a nominal decrease in cash volume requires the long-term and concurrent existence of several factors.

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Section: Vision and Risks Of A Cashless Societymentioning

confidence: 99%

Comparative Analysis of the Changes in Cash Demand in Hungary

Végső¹

2020

Financial and Economic Review

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“…Thus, until a clear regulatory framework clarifying their relationship to fiat currencies is in place, it will be difficult for any type of cryptocurrency to be widely used as money. 6 Another scenario would be issuance of public cryptocurrency, that is, central bank digital or cryptocurrencies, which could be legal tender (Mancini-Griffoli et al, 2018). Many central banks are currently studying the possibility of such issuance.…”

Section: A Timely Opportunity Nonetheless To Reflect On the Current Mmentioning

confidence: 99%

Do Fintech and Cryptocurrency Initiatives Make Banks Less Special?

Schich

2019

BER

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Banks as a group have traditionally been considered “special” in the sense of meriting the full set of provisions of the financial safety net. The specific motivations for that view have evolved over time, although it owes more to a specific combination of economic functions performed as opposed to any particular function. These functions include offering transaction accounts redeemable in cash on demand, providing liquidity, and serving as conduits for payments and monetary policy transmission. Recent developments suggest however that almost all of the individual economic functions performed by banks can in fact be provided in unbundled form by Fintech initiatives, in some cases more rapidly, at lower fees, and via more streamlined digital interfaces. One important exception remains monetary policy transmission. For the performance of this function, policy makers and central bankers have reserved a privileged role for banks. A radical departure from the current fractional reserve system would be required to unbundle that function and separate money from the banking system, and some private cryptocurrencies have been proposed with the explicit intent to change the nature of money. So far, the present article concludes such initiatives remain marginal, so that banks as a group remain “special”. This observation owes much to the fact that central banks rely on the capacity of the banking system to create money and provide the economy with adequate liquidity and, despite occasional financial crises, have concluded that the efficiency of the current system outweighs the associated costs.

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“…We represent these preferences by an interval with cash and deposits at opposite ends: cash provides anonymity in transactions, while bank deposits are more secure. 4 A CBDC can take any point on this interval, depending on its de- 1 For an overview of ongoing CBDC initiatives, see Mancini-Griffoli et al (2018), Bank for International Settlements (2018) and Prasad (2018). In a survey of 63 central banks, a third of central banks perceived CBDC as a possibility in the medium term (Barontini and Holden, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…2 See Mancini-Griffoli et al (2018) for other design aspects of CBDCs, which are mostly of an operational nature, such as the means to disseminate, secure and clear CBDCs. 3 We parameterize and vary the degree to which bank financing of firms provides efficiency gains.…”

Section: Introductionmentioning

confidence: 99%

“…sign. For instance, a central bank could provide partial anonymity (e.g., towards third-parties but not the authorities), set transaction limits below which anonymity is retained, or make anonymity conditional, only to be lifted under court order -possibilities under consideration in central banks' CBDC studies (Mancini-Griffoli et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

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Designing Central Bank Digital Currencies

Agur

Ratnovski

2019

IMF Working Papers

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We study the optimal design of a central bank digital currency (CBDC) in an environment where agents sort into cash, CBDC and bank deposits according to their preferences over anonymity and security; and where network effects make the convenience of payment instruments dependent on the number of their users. CBDC can be designed with attributes similar to cash or deposits, and can be interest-bearing: a CBDC that closely competes with deposits depresses bank credit and output, while a cash-like CBDC may lead to the disappearance of cash. Then, the optimal CBDC design trades off bank intermediation against the social value of maintaining diverse payment instruments. When network effects matter, an interest-bearing CBDC alleviates the central bank's tradeoff.

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Casting Light on Central Bank Digital Currencies

Cited by 158 publications

References 36 publications

Comparative Analysis of the Changes in Cash Demand in Hungary

Comparative Analysis of the Changes in Cash Demand in Hungary

Do Fintech and Cryptocurrency Initiatives Make Banks Less Special?

Designing Central Bank Digital Currencies

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