by VoxEU, September 27, 2023. HTML. From the conclusions: … it is critical to account for indirect in addition to direct social costs and benefits when ranking monetary architectures. … the costs and benefits we consider point to an important role of central bank digital currency in an optimal monetary architecture unless pass-through funding is necessary to stabilise capital investment and very costly. … the interest rate on CBDC should differ from zero and from the rate on reserves. From the text: Notes: The dark grey area represents the efficiency advantage of CBDC needed to make it less costly than a two-tier system with optimum reserve holdings. The light grey area displays the same object but based on actual US reserve holdings rather than model-implied optimal ones. These
Topics:
Dirk Niepelt considers the following as important: Bank regulation, Central bank digital currency, Central bank loan, Contributions, Distortion, Liquidity, Pass-through funding, Payment, Payment operations, too big to fail
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VoxEU, September 27, 2023. HTML.
From the conclusions:
… it is critical to account for indirect in addition to direct social costs and benefits when ranking monetary architectures.
… the costs and benefits we consider point to an important role of central bank digital currency in an optimal monetary architecture unless pass-through funding is necessary to stabilise capital investment and very costly.
… the interest rate on CBDC should differ from zero and from the rate on reserves.
From the text:
Notes: The dark grey area represents the efficiency advantage of CBDC needed to make it less costly than a two-tier system with optimum reserve holdings. The light grey area displays the same object but based on actual US reserve holdings rather than model-implied optimal ones. These distributions allow for pass-through costs and tax distortions, quantified by assuming taxing households causes deadweight burdens of 25% per tax dollar. The distributions are based on two million realisations.