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Money. Monetary policy --- Italy

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Zonder onderwerpscode: financiewezen

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Would the introduction of a Central Bank Digital Currency (CBDC) lead to lower deposits (disintermediation) and lending in the banking sector? This paper develops a model where households heterogeneous in wealth allocate between an illiquid asset and assets that can be used for payments: bank deposits, cash, and CBDC. CBDC is more efficient as a means of payment and has lower access cost than deposits. Deposits are offered by an imperfectly competitive banking sector which raises deposit interest rates after CBDC introduction to prevent substitution away from deposits to CBDC. We find that there are two opposing margins of impact on the level of aggregate deposits: (1) the intensive margin gain in deposits by richer households increasing their holdings of deposits because of higher interest rates, and (2) the extensive margin loss of deposits among poorer households who switch from deposits to the CBDC. The extensive margin loss in deposits is more likely to dominate (yielding a fall in aggregate deposits) when the mass of poorer households is large and when it is relatively costly to access bank accounts. This tends to be the case in developing and emerging market economies. However, even when the extensive margin loss of deposits dominates and there is disintermediation, the impact on lending is quantitatively small if banks have access to other forms of funding, such as wholesale or central bank financing.

Bank credit --- Bank deposits --- Banking --- Banks and Banking --- Banks and banking --- Banks --- Central Bank digital currencies --- Central Banks and Their Policies --- Credit --- Currency crises --- Deposit rates --- Depository Institutions --- Distributed ledgers --- Economic & financial crises & disasters --- Economics of specific sectors --- Economics --- Economics: General --- Finance --- Finance: General --- Financial inclusion --- Financial Markets and the Macroeconomy --- Financial markets --- Financial services industry --- Financial services --- Government and the Monetary System --- Industries: Financial Services --- Informal sector --- Interest rates --- Interest Rates: Determination, Term Structure, and Effects --- Macroeconomics --- Micro Finance Institutions --- Monetary economics --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Monetary Systems --- Money and Monetary Policy --- Money --- Mortgages --- Payment Systems --- Regimes --- Standards --- Technological innovations --- Technology

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Against the backdrop of a rapidly digitalizing world, there is a growing interest in central bank digital currencies (CBDCs) among central banks, including in the Middle East and Central Asia (ME&CA) region. This paper aims to support ME&CA policymakers in examining key questions when considering the adoption of a CBDC while underscoring the importance of country-specific analyses. This paper does not provide recommendations on CBDC issuance. Instead, it frames the discussion around the following key questions: What is a CBDC? What objectives do policymakers aim to achieve with the issuance of a CBDC? Which inefficiencies in payment systems can CBDCs address? What are the implications of CBDC issuance for financial stability and central bank operational risk? How can CBDC design help achieve policy objectives and mitigate these risks? The paper provides preliminary answers to these questions at the regional level. A survey of IMF teams and public statements from ME&CA policymakers confirm that promoting financial inclusion and making payment systems more efficient (domestic and cross-border) are the top priorities in the region. Payment services through CBDCs, if offered at a lower cost than existing alternatives, could spur competition in the payment market and help increase access to bank accounts, improve financial inclusion, and update legacy technology platforms. CBDCs may also help improve the efficiency of cross-border payment services, especially if designed to address frictions arising from a lack of payment system interoperability, complex processing of compliance checks, long transaction chains, and weak competition. At the same time, CBDCs could negatively impact bank profitability while introducing a substantial operational burden for central banks. However, the exact economic and financial impacts of CBDCs need further study and would depend on estimates of CBDC demand, which are uncertain and country- dependent. CBDC issuance and adoption is a long journey that policymakers should approach with care. Policymakers need to analyze carefully whether a CBDC serves their country’s objectives and whether the expected benefits outweigh the potential costs, in addition to risks for the financial system and operational risks for the central bank.

Banking --- Banks and Banking --- Banks and banking --- Banks --- Central Bank digital currencies --- Clearinghouses --- Commercial banks --- Depository Institutions --- Digital financial services --- Distributed ledgers --- Economics --- Finance --- Finance: General --- Financial inclusion --- Financial institutions --- Financial Markets and the Macroeconomy --- Financial markets --- Financial services industry --- General Financial Markets: Government Policy and Regulation --- Government and the Monetary System --- Industries: Financial Services --- International agencies --- International Agreements and Observance --- International Economics --- International institutions --- International organization --- International Organizations --- Micro Finance Institutions --- Monetary Systems --- Mortgages --- Payment Systems --- Payment systems --- Political Economy --- Political economy --- Public Policy --- Regimes --- Standards --- Technological innovations --- Technology