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Tag Archives: Fiscal equivalence

“Central Bank Digital Currency: Why It Matters and Why Not,” VoxEU, 2018

VoxEU, August 20, 2018. HTML. To a first approximation, inside and outside money are substitutes—the introduction of CBDC does not change the equilibrium allocation. Bank incentives and central bank incentives might be affected though. CBDC could increase the incentive to extend credit but might undermine the political support for implicit financial assistance to banks.

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“Central Bank Digital Currency: Why It Matters and Why Not,” VoxEU, 2018

VoxEU, August 20, 2018. HTML. To a first approximation, inside and outside money are substitutes—the introduction of CBDC does not change the equilibrium allocation. Bank incentives and central bank incentives might be affected though. CBDC could increase the incentive to extend credit but might undermine the political support for implicit financial assistance to banks.

Read More »