## ftnea2023010

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### I. Introduction and Summary of Findings
- BIS 2022 survey: "93 percent of central banks are exploring CBDCs, and 58 percent report that they are likely to or might possibly issue a retail CBDC in the short or medium term (Kosse and Mattei 2023)."
- "More than 100 countries are exploring retail CBDC issuance. Several central banks have already launched pilots or even issued a CBDC."
- Baseline design considered: a non-remunerated retail CBDC, legally accessible only in the issuing jurisdiction, with possible caps on individual holdings.
- Key mechanisms and motivations:
  - Enhancing monetary policy effectiveness (for some countries).
  - Modernizing the financial system, reducing risks from digitalization, lowering costs of person-to-person transfers (for others).
  - Risk that CBDCs could weaken monetary policy transmission.
- Summary of expected impacts on financial conditions:
  - CBDCs offer a safe store of value and efficient means of payment, which can increase competition for deposit funding, raise banks’ share of wholesale funding, and lower bank profits → tighten financial conditions.
  - CBDCs can bolster financial inclusion and, in dollarized/euroized or crypto-adopting economies, encourage greater use of local currency ("de-dollarization/de-cryptoization") → ambiguous or loosening effects.
- Net effects (level vs transmission):
  - Level effects: immediate tightening or loosening of financial conditions upon introduction.
  - Transmission effects: persistent changes in how monetary policy shocks affect output, employment, and inflation after CBDC integration.
- Policy stance:
  - Central banks should monitor macroeconomic effects of CBDC issuance and can adjust policy instruments to maintain desired financial conditions.
  - Most central banks plan precautionary design features (holding and transaction limits, tiering of interest rates) to limit deposit migration into CBDCs.
- Contextual caveats:
  - Effects expected to be relatively small in normal times; potentially more significant when interest rates are low or during financial market stress.
  - A non-remunerated CBDC could entrench the zero lower bound for interest rates.
  - In financial stress, risk of flight from retail deposits into CBDCs is greater.
- Long-run role:
  - CBDCs could help maintain convertibility between private money and central bank money where cash is marginalized and serve as a "monetary anchor" (Panetta, 2021).

### II. Conceptual Framework
- Distinction:
  - "Level effects": upon CBDC introduction, tightening or loosening of financial conditions from changes in the macroeconomic environment.
  - "Transmission effects": changes in how a given monetary policy shock affects macroeconomic variables after CBDC is integrated.
- Transmission strength definition:
  - Transmission is stronger (weaker) if a given change in monetary policy stance has larger (smaller) effects on macroeconomic variables in an economy with CBDCs versus without, all else equal.
- Temporal note:
  - Level effects apply only during the introduction phase; transmission effects persist after full integration of CBDC.

### III. Design Features of CBDCs (Baseline Considered)
- Baseline: non-remunerated retail CBDC, legally accessible only domestically, with possible caps on individual holdings.
- Retail vs. Wholesale:
  - Retail CBDCs: widely held digital central bank money for individuals.
  - Wholesale CBDCs: digital central bank reserves limited to banks and financial institutions.
- Features and implications:
  - CBDCs are "as safe and risk-free as physical cash." While safe, inflation could decrease purchasing power.
  - Caps on individual holdings would limit CBDC's role as a savings vehicle.
  - CBDCs provide an attractive means of payment for person-to-person, person-to-business, and business-to-business transactions; potential add-ons include offline payments and programmability.
  - Cost-reduction evidence cited:
    - "0.5 percent of GDP for the euro area" and similar estimates for Canada and Uruguay.
    - Higher estimates: Albania "1.5 percent of GDP" and Guyana "2.6 percent of GDP."
- Design choices to mitigate risks:
  - Non-remuneration limits deposit migration (all launched or piloted CBDCs thus far are non-remunerated).
  - Caps on individual holdings to preclude large-scale adoption and make digital bank runs into CBDCs impossible.
  - Tiered digital wallets: wallets with higher caps require more extensive customer identification (Bindseil 2020).
- Cross-border usage:
  - Analysis focuses on domestically restricted CBDCs; international dimensions acknowledged but not the primary focus.

### IV. Impact on the Macroeconomic Environment and Banking Sector
- Baseline policy environment: inflation target monetary policy regime where the main instrument is the policy interest rate.
- Main channels through which CBDCs affect the macroeconomic environment:
  - Competition for bank deposit funding: deposits may leave banks for CBDC (Bindseil 2020; Mancini Griffoli and others 2018).
  - Increased reliance on wholesale funding and lower bank profits.
  - Potentially greater financial inclusion if CBDC addresses unbanked barriers.
  - Potential reduction of dollarization/cryptoization and greater use of local currency.
- Banking sector implications (monopolistic competition focus):
  - Banks facing higher competition for deposits may raise deposit interest rates to compete.
  - Banks may increase reliance on wholesale funding; wholesale funding is typically more expensive and less stable than deposits.
  - Bank profits could fall if margins are squeezed, with ambiguous implications for lending (tightening via stricter lending standards or loosening via higher risk-taking).
  - Financial inclusion effects depend on how much CBDC addresses country-specific access barriers.
  - Effects vary across banks and jurisdictions depending on deposit reliance.

### V. Model Insights and Quantitative Evidence
- Static partial equilibrium model (Figure 4):
  - CBDC issuance draws deposits away from banks, deposit supply shifts left, banks raise deposit interest rates, total deposits decline.
  - Reduction in deposits larger when CBDC is more attractive.
  - Banks with greater market power (steeper demand curve) better insulate loan volumes; banks with less market power show larger contractions.
- Remuneration matters:
  - Non-remunerated CBDCs: consumer adoption has been slow in launched countries; may not substantially reduce deposit supply.
  - Remunerated CBDCs: could induce larger deposit outflows.
- Quantitative estimates from literature (static partial equilibrium):
  - Estimated change in deposits ranges from –10 percent for the UK (Chiu and Hill 2018) to –0.1 percent for Portugal (Canhoto 2004).
  - Changes in deposit rates estimated at +17 basis points for the UK and +25 basis points for Portugal.
  - Estimates assume a liquidity value of the CBDC of 50 basis points and specific elasticities of deposit demand and supply.
- General equilibrium model (Figure 5):
  - If banks accept lower margins in response to CBDC competition, the decrease in deposit quantities can be smaller or turn positive; bank deposit demand curve may shift upward as banks accept lower margins.

### VI. Heterogeneous Households and Financial Inclusion
- Model outcomes (Figure 6):
  - Before CBDC: unbanked poor (wealth below W1) hold only cash; rich (above W1) hold cash and deposits.
  - After CBDC: very poor (below W0) remain cash-only; middle class (W0 to W2) hold cash and CBDCs; very rich (above W2) hold cash, CBDCs, and deposits.
  - Financial inclusion improves as some previously unbanked (wealth between W0 and W1) gain access to CBDC.
  - Disintermediation decomposed into:
    - Extensive margin loss: deposits lost from those switching to CBDC (wealth between W1 and W2).
    - Intensive margin gain: higher deposit holdings from those who continue to hold deposits due to higher deposit interest rates (wealth above W2).
- Global and calibrated estimates:
  - Globally, 1.4 billion adults (24 percent of adults) still lack access to a financial account.
  - Gender gap in 2021: 6 percentage points in emerging economies; globally 74 percent of men have a financial account compared with 68 percent of women.
  - Calibration for a representative developing economy suggests up to a 20 percentage points (as a share of population) boost to financial inclusion from unbanked gaining access to a CBDC (assuming a liquidity value of the CBDC of 50 basis points and a 20 percent reduction in costs to access the CBDC compared to that of a bank account).

### VII. Tightness of Financial Conditions — Level Effects from CBDC Issuance
- Overview: CBDC-induced changes in deposit and lending rates, deposit volumes, and credit provisioning create "level effects" on the tightness of financial conditions (Figure 7).
- Channel-specific impacts:
  - Increased competition for deposit funding → tightens financial conditions (banks raise deposit rates to offset CBDC liquidity value).
  - Increased wholesale funding → tightens financial conditions:
    - Wholesale funding is more expensive due to loss of deposit insurance/implicit guarantees and external financing costs.
    - Wholesale funding may be less stable than retail deposits; banks might hold more liquid assets or cut lending.
    - Whited, Wu, and Xiao (2023) estimate bank lending falls by one-fourth of the drop in deposits as banks partially replace lost deposits with wholesale funding.
    - Partial equilibrium implied lending changes: –2.5 percent for the UK to –0.03 percent for Portugal (Chiu and Hill 2018; Canhoto 2004).
  - Lower bank profits → ambiguous impact: potential tightening via stricter lending or loosening via increased risk-taking.
  - Increased financial inclusion → could loosen financial conditions:
    - Mobilization of savings from previously unbanked could provide a stable funding pool for lending; effect size limited by unbanked share of overall wealth.
    - Use of CBDC transaction histories as alternative data could reduce information asymmetry and lower lending rates; evidence from Alipay: adopting cashless payments increases probability of getting credit access by 56 percent; a 1 percent increase in cashless payment flow results in a 0.41 percent increase in the credit line.
  - De-dollarization/de-cryptoization → ambiguous impact on financial conditions depending on domestic vs. foreign interest-rate differentials.
- Central bank responses to level effects:
  - Tools to limit deposit decline: caps on individual CBDC holdings, fees or discouraging convertibility from deposits to CBDC, lending funds diverted from deposits back to banks.
  - Central bank can offset tightness/looseness of financial conditions by lowering/increasing the policy rate and communicating the rationale.

### VIII. Transmission Channels of Monetary Policy and CBDC Effects
- Transmission channels (Figure 8):
  - Interest rate channel: policy rate changes affect overall interest rates and aggregate demand.
  - Bank lending channel: policy rate changes affect banks’ cost of funds, balance sheets, profits, non–deposit funding costs, credit supply, and lending rates/standards.
  - Asset price channel: policy rate changes affect asset prices and collateral values, altering borrowers’ net worth and financing costs.
  - Exchange rate channel: policy rate changes affect exchange rate via uncovered interest parity, influencing net exports and balance-sheet exposures.
- CBDC-induced impacts on transmission (Figure 9):
  - Increased competition for deposit funding → strengthens interest rate and bank lending channels (greater pass-through from policy rates to deposit rates under less bank market power).
  - Increased wholesale funding → strengthens the bank lending channel (wholesale funding costs more sensitive to policy rate; uninsured wholesale markets sensitive to bank balance-sheet changes).
  - Lower bank profits → potentially asymmetric but relatively small effect on interest rate channel.
  - Higher financial inclusion → strengthens interest rate and asset price channels via broader access to interest-sensitive borrowing and saving instruments; aggregate impact limited by financially excluded population’s share.
  - Increased monetary autonomy from reduced dollarization/cryptoization → amplifies all transmission channels.
  - Exchange rate channel → unlikely to experience additional effects; uncovered interest parity relationship expected to remain intact.

### IX. Box 1 — Lessons from the US Overnight Reverse Repurchase Agreement Facility (ON RRP)
- Overview:
  - ON RRP provides nonbank financial firms direct access to central bank balance sheet; offers US Treasury–backed repos to money market funds overnight.
  - Administered rate set at bottom of the federal funds target range, below the rate on balances held at the Federal Reserve Banks (IORB).
- Similarities to a CBDC and effects:
  - ON RRP can disintermediate banks and reduce deposit supply by providing a safe alternative for money market investors.
  - Key distinction: ON RRP is not retail and not directly available to the general public.
  - Empirical effects so far:
    - Bank deposit interest rates do not seem more sensitive to the policy rate since ON RRP introduction.
    - No significant contraction in bank deposit supply observed to date.
    - The facility can crowd out private repo (Anderson and Kandrac 2017; Infante 2020).
- Monetary operations and balance sheet implications:
  - Interest-rate operational frameworks: corridor vs floor systems; CBDC demand could complicate liquidity forecasting, especially in a mid-corridor targeting regime.
  - Central banks could temporarily switch to a full-allotment regime if CBDC demand volatility increases in crises.
  - Central bank balance sheet could grow considerably if CBDC replaces deposits; demand for government bonds likely to increase to balance CBDC liabilities.
  - Available evidence suggests marginal price impacts on yields; in countries with much smaller government bond markets the impact could be greater.
  - Seigniorage: a large balance sheet increases seigniorage (Bindseil 2016) but raises interest rate, foreign exchange, and default risks (Hall and Reis 2015). Losses could undermine central bank independence (Ishi, Fujita, and Stone 2011).
  - Quantitative indication: estimated effects of quantitative easing equal to 1 percent of GDP on 10-year US Treasury yields typically lie in the neighborhood of 4 to 5 basis points (Williams 2011). Purchases to balance CBDC liabilities would fall heavily on shorter maturities, so effects on yields would likely be much smaller.
- Risks in low-rate environments and crises; mitigation:
  - An unremunerated CBDC could entrench the zero lower bound; without holding limits there could be no other asset with a negative interest rate (Jamet and others 2022).
  - Under financial market stress, retail deposit flight into CBDCs could strengthen competition for deposit funding, increase wholesale funding needs, and reduce bank profits.
  - Runs can evolve rapidly due to new technologies and social media (example: Silicon Valley Bank).
  - Mitigation: effective limits on CBDC holdings would significantly reduce concerns.
  - Operational and reputational risks: technical failures, cyberattacks, loss of user funds, or breaches of confidential user data could undermine central bank credibility and affect inflation expectations and monetary policy effectiveness.
- Effects across monetary regimes:
  - Exchange rate management: potential loss of independent monetary policy under a strict peg; CBDCs could make it easier for foreigners to hold domestic currency and vice versa.
  - Monetary targeting: CBDC adoption could inject instability in money velocity, challenging monetary targeting; CBDC issuance is unlikely to have a significant effect relative to other factors.
  - Overall: CBDCs could amplify international spillovers and increase international linkages (Ferrari, Mehl, and Stracca 2022).
- Remunerated and foreign CBDCs:
  - Remunerated CBDCs could serve as a risk-free overnight asset, potentially raising r* and supporting negative interest-rate policy, strengthening transmission channels (Gorton and Ordoñez 2022; Armelius and others 2018).
  - Foreign CBDCs available domestically could significantly impair monetary policy effectiveness and autonomy; restrictions (holding/transaction caps) could alleviate effects.
  - If domestic CBDC can be held in large quantities abroad, domestic central bank balance sheets could face large fluctuations from external demand, affecting market liquidity and availability/price of domestic safe assets (He and McCauley 2010).

### X. Policy Implications and Recommendations
- Design-first mitigation:
  - Baseline non-remuneration, holding caps, and tiering of wallets are effective design tools to limit deposit migration and digital bank-run risk.
  - Caps on individual holdings and transaction limits reduce the likelihood of broad-based disintermediation.
- Operational preparedness:
  - Central banks should monitor macroeconomic and banking-sector indicators closely during introduction and integration phases.
  - Be prepared to adjust policy instruments (policy rate, open-market operations, reserve remuneration, temporary full-allotment) to offset level effects on financial conditions.
  - Maintain communication to manage expectations and term spreads.
- Crisis and low-rate considerations:
  - Recognize that impacts are larger when policy rates are low or under financial stress; unremunerated CBDC can entrench the zero lower bound absent holding limits.
  - Implement effective holding limits and contingency operational measures to limit rapid deposit runs.
- Cross-border and foreign-CBDC risks:
  - Consider restrictions on foreign CBDC usage domestically and monitor international linkages to preserve monetary autonomy.
  - Anticipate potential central bank balance sheet volatility from external demand if domestic CBDC is widely held abroad.
- Financial inclusion:
  - Leverage tiered wallets and reduced access costs to maximize inclusion benefits while containing risks.
  - Explore use of CBDC transaction histories as alternative data for credit underwriting to expand access to credit.

*Implications of Central Bank Digital Currencies for Monetary Policy Transmission NOTE/2023/010*

### References .............................................................................................................

### ftnea2023010 - References

### I. Introduction and Summary of Findings
- BIS 2022 survey: "93 percent of central banks are exploring CBDCs, and 58 percent report that they are likely to or might possibly issue a retail CBDC in the short or medium term (Kosse and Mattei 2023)."
- "More than 100 countries are exploring retail CBDC issuance. Several central banks have already launched pilots or even issued a CBDC."
- Focus of analysis: retail CBDC available to the general public; baseline design is a non-remunerated CBDC with possible caps on individual holdings and accessible only in the issuing jurisdiction.
- Key mechanisms and motivations:
  - Enhancing monetary policy effectiveness (for some countries).
  - Modernizing the financial system, reducing risks from digitalization, lowering costs of person-to-person transfers (for others).
  - Risk that CBDCs could weaken monetary policy transmission.
- Summary of expected impacts:
  - CBDC issuance can affect the macroeconomic environment and thereby influence the tightness of financial conditions and the main transmission channels: interest rate, bank lending, asset price, and exchange rate channels.
  - CBDCs offer a safe store of value and efficient means of payment, which can increase competition for deposit funding, increase banks’ share of wholesale funding, and lower bank profits.
  - CBDCs can potentially bolster financial inclusion and, in dollarized/euroized or crypto-adopting economies, encourage greater use of local currency ("de-dollarization/de-cryptoization").
- Net effects on financial conditions:
  - Increased competition for deposit funding, increased wholesale funding, and lower bank profits → tighten financial conditions.
  - Increased financial inclusion → loosen financial conditions.
  - De-dollarization/de-cryptoization → ambiguous impact on financial conditions.
- Policy stance:
  - Central banks should monitor macroeconomic effects of CBDC issuance and can adjust policy instruments to maintain desired financial conditions.
  - Most central banks plan precautionary design features (holding and transaction limits, tiering of interest rates) to limit deposit migration into CBDCs.
- Contextual caveats:
  - Effects expected to be relatively small in normal times; potentially more significant when interest rates are low or during financial market stress.
  - A non-remunerated CBDC could entrench the zero lower bound for interest rates.
  - In financial stress, risk of flight from retail deposits into CBDCs is greater.
- Long-run role:
  - CBDCs could help maintain convertibility between private money and central bank money where cash is marginalized and serve as a "monetary anchor" (Panetta, 2021).

### II. Conceptual Framework
- Framework distinction:
  - "Level effects": upon CBDC introduction, tightening or loosening of financial conditions from changes in the macroeconomic environment.
  - "Transmission effects": changes in how a given monetary policy shock affects output, employment, and inflation after CBDC is integrated.
- Transmission strength definition:
  - Transmission is stronger (weaker) if a given change in monetary policy stance has larger (smaller) effects on macroeconomic variables in an economy with CBDCs versus without, all else equal.
- Temporal note:
  - Level effects apply only during the introduction phase; transmission effects persist after full integration of CBDC.

### III. Design Features of CBDCs (Baseline Considered)
- Baseline: non-remunerated retail CBDC, legally accessible only domestically, with possible caps on individual holdings.
- Retail vs. Wholesale:
  - Retail CBDCs: widely held digital central bank money for individuals.
  - Wholesale CBDCs: digital central bank reserves limited to banks and financial institutions.
- Key features and implications:
  - CBDCs offer a safe store of value as a direct liability of the central bank, "as safe and risk-free as physical cash."
    - Note: "While CBDCs are a safe store of value, as with cash, the level of inflation could decrease their purchasing power."
    - Note: "Caps on individual holdings of CBDC would limit its potential as a savings vehicle."
  - CBDCs provide an attractive means of payment for person-to-person, person-to-business, and business-to-business transactions; potential add-ons include offline payments and programmability.
  - CBDCs could lower costs: offered through digital wallets, reduce costs of physical cash management, lower transaction fees, and potentially reduce cross-border payment costs by reducing intermediaries and enabling direct settlement on central bank balance sheet.
    - Empirical cost estimates cited in source: "0.5 percent of GDP for the euro area" and similar estimates for Canada and Uruguay; higher estimates for Albania "1.5 percent of GDP" and Guyana "2.6 percent of GDP."
  - Design choices to mitigate risks:
    - Non-remuneration limits deposit migration (all launched or piloted CBDCs thus far are non-remunerated).
    - Caps on individual holdings to preclude large-scale adoption and make digital bank runs into CBDCs impossible.
    - Tiered digital wallets as a means to promote inclusion while controlling caps; wallets with higher caps require more extensive customer identification (Bindseil 2020).
  - Cross-border usage:
    - The note mainly considers CBDCs legally restricted to the issuing jurisdiction, acknowledging that international dimensions could be important but current pilots largely focus on domestic usage.

### IV. Impact on the Macroeconomic Environment
- Baseline policy environment: anchored in an inflation target monetary policy regime.
  - "In an inflation target framework, monetary authorities commit to maintaining inflation at a preannounced level or band. The main policy instrument is the policy interest rate, and monetary policy decisions are primarily guided by the deviation of forecasted inflation from its target level."
- Channels through which CBDCs affect macroeconomic environment:
  - Competition for bank deposit funding:
    - "By virtue of offering a safe store of value and an efficient means of payment, deposits may leave banks in favor of the CBDC, leading to a decrease in deposit funding available to banks (Bindseil 2020; Mancini Griffoli and others 2018)."
    - Magnitude depends on extent CBDC is an attractive alternative to deposits.
  - Increased banks' reliance on wholesale funding and lower bank profits (as implied from earlier sections).
  - Potential bolstering of financial inclusion if CBDC addresses barriers for the unbanked.
  - Potential reduction of dollarization/cryptoization and increased attractiveness of local currency in relevant economies.
- Consequences for monetary policy:
  - Changes in macroeconomic environment lead to "level effects" (immediate tightening/loosening of financial conditions) and "transmission effects" (changing effectiveness of monetary policy channels).
  - CBDCs may strengthen transmission channels under certain conditions:
    - De-dollarization/de-cryptoization likely to amplify all transmission channels.
    - Increased competition for deposit funding could strengthen interest rate and bank lending channels.
    - Increased wholesale funding could strengthen bank lending channel.
    - Higher financial inclusion can strengthen interest rate and asset price channels.
    - Exchange rate channel: "There are unlikely to be additional effects on the exchange rate channel."
- Practical considerations and uncertainty:
  - Strengthening of transmission via competition and wholesale funding requires significant substitution of bank deposits for CBDCs, which may not occur.
  - Financial inclusion effects constrained by the relatively small share in overall savings and lending of the financially excluded population in advanced economies.
  - De-dollarization/de-cryptoization effects may be small if CBDCs do not effectively increase local currency attractiveness.
  - Precautionary design features (holding and transaction limits, tiering) will limit deposit migration and therefore likely ensure limited impact on monetary policy transmission in most circumstances.
  - When policy rates are low or during financial stress, impacts on monetary transmission could be more significant; non-remunerated CBDC could entrench the zero lower bound.

*International Monetary Fund — FINTECH NOTES: Implications of CBDCs for Monetary Policy Transmission*

### Section VII also considers other monetary regimes.

### Section VII also considers other monetary regimes.

### Macroeconomic environment and banking sector implications
- Focus on monopolistic competition in the banking sector because banks have some degree of market power in most countries.
- Key channels through which CBDCs affect banks:
  - Higher competition for deposit funding → banks raise deposit interest rates to compete with CBDCs.
  - Higher wholesale funding to replace deposits → banks could increase reliance on wholesale funding.
  - Bank profits: lower if margins are squeezed by higher deposit rates or higher funding costs from wholesale funding; higher if CBDC addresses barriers to inclusion and expands bank customer base.
  - Financial inclusion: CBDCs could bolster inclusion and expand access to financial services for the unbanked; magnitude depends on how much a CBDC addresses country-specific barriers.
  - Dollarization / Cryptoization: CBDCs could help de-dollarization or counter “cryptoization” by encouraging greater use of the local currency, but would not address deeper issues tied to monetary policy framework and central bank credibility.
- Design and policy features shaping deposit outflows to CBDC:
  - Attractiveness of CBDCs relative to deposits depends on perceived safety, ease of access, convenience, technological features (programmability), cost of use, privacy/anonymity, and merchant acceptance.
  - Caps on individual holdings can limit switching from deposits to CBDCs.
  - The impact is greater on banks that rely more on deposit funding; effects can vary across jurisdictions.

### Bank disintermediation — partial and general equilibrium model insights
- Static partial equilibrium model (Figure 4) findings:
  - CBDC issuance draws deposits away from banks, shifting deposit supply leftward.
  - Banks raise deposit interest rates (move along demand for deposit funding curve) but total deposits decrease.
  - Reduction in deposits is greater if the CBDC is more attractive (larger leftward shift).
  - When banks have more market power (steeper demand curve), they better insulate loan volume; banks with little market power show larger contraction in deposit and loan volume.
- Non-remunerated versus remunerated CBDC:
  - Non-remunerated CBDCs may not lead to substantial deposit supply reduction; consumer adoption of non-remunerated CBDCs has been slow and limited in launched countries.
  - If CBDC offers interest, the reduction in deposits could be larger (greater leftward shift).
  - Demand for CBDC largely determined by remuneration; Li (2023) and BIS 2021 cited as context.
- Quantitative estimates from literature (static partial equilibrium):
  - Estimated change in deposits ranges from –10 percent for the UK (Chiu and Hill 2018) to –0.1 percent for Portugal (Canhoto 2004).
  - Changes in deposit rates estimated at +17 basis points for the UK and +25 basis points for Portugal.
  - Estimates assume a liquidity value of the CBDC of 50 basis points and elasticities of deposit demand and supply to interest rate movements.
- General equilibrium model (Figure 5) findings:
  - If banks respond to competition from CBDCs by accepting lower margins, decrease in deposit quantities can be even smaller or could turn positive.
  - Demand for deposit funding curve may shift upward as banks accept lower margins, increasing equilibrium deposits.

### Heterogeneous households and financial inclusion
- Heterogeneous-household model (Figure 6) outcomes:
  - Before CBDC: unbanked poor (wealth below W1) hold only cash; rich (wealth above W1) hold cash and deposits.
  - After CBDC issuance: very poor (wealth below W0) remain holding only cash; middle class (wealth between W0 and W2) hold cash and CBDCs; very rich (wealth above W2) hold cash, CBDCs, and deposits.
  - Financial inclusion improves as some unbanked poor households (wealth between W0 and W1) gain access to CBDC.
  - Disintermediation composed of:
    - Extensive margin loss: deposits lost from those who switch from deposits to CBDC (wealth between W1 and W2).
    - Intensive margin gain: higher deposit holdings from those who continue to hold deposits because of higher deposit interest rates (wealth above W2).
- Global and calibrated estimates:
  - Globally, 1.4 billion adults (24 percent of adults) still lack access to a financial account.
  - Gender gap in 2021: 6 percentage points in emerging economies; globally 74 percent of men have a financial account compared with 68 percent of women.
  - Calibration for a representative developing economy suggests up to a 20 percentage points (as a share of population) boost to financial inclusion from unbanked gaining access to a CBDC (assuming a liquidity value of the CBDC of 50 basis points and a 20 percent reduction in costs to access the CBDC compared to that of a bank account).

### Tightness of financial conditions — level effects from CBDC issuance
- Overview: CBDC-induced changes in deposit and lending rates, deposit volumes, and credit provisioning create “level effects” on the tightness of financial conditions (Figure 7).
- How specific channels affect tightness:
  - Increased competition for deposit funding → tightens financial conditions (banks raise deposit rates to offset CBDC liquidity value).
  - Increased wholesale funding → tightens financial conditions:
    - Wholesale funding is more expensive than deposits due to loss of deposit insurance/implicit guarantees and external financing costs; switching away from deposits could raise lending rates.
    - Wholesale funding increases market discipline, possibly decreasing credit provision as banks face higher funding costs or deposit drops and take more risks.
    - Wholesale funding may be less stable than retail deposits; banks might hold more liquid assets or cut lending.
    - Quantitative impact depends on expected deposit decrease; Whited, Wu, and Xiao (2023) estimate bank lending falls by one-fourth of the drop in deposits as banks partially replace lost deposits with wholesale funding.
    - Partial equilibrium implied lending changes: –2.5 percent for the UK to –0.03 percent for Portugal (based on Chiu and Hill 2018 and Canhoto 2004).
  - Lower bank profits → ambiguous impact on financial conditions:
    - Banks may tighten lending standards or increase interest rates to compensate; alternatively, some banks might increase risk-taking.
  - Increased financial inclusion → could loosen financial conditions:
    - Mobilization of savings from previously unbanked could create a stable fund pool for greater lending, but the unbanked own a small share of overall wealth and have lower savings rates.
    - Use of CBDC transaction histories as alternative data for credit underwriting could reduce information asymmetry, lower lending interest rates, and expand credit access (evidence from Alipay: adopting cashless payments increases probability of getting credit access by 56 percent; a 1 percent increase in cashless payment flow results in a 0.41 percent increase in the credit line).
  - Decreasing dollarization/cryptoization → ambiguous impact on financial conditions:
    - De-cryptoization could loosen financial conditions via deposit supply increases.
    - De-dollarization effects depend on domestic vs. foreign interest rate differentials; e.g., if domestic interest rate is higher than foreign, decline in dollarization leads to tightening.
- Central bank policy responses:
  - Central bank can limit decline in bank deposits via caps on individual CBDC holdings, fees or discouraging convertibility from deposits to CBDC, or lending funds diverted from deposits back to banks.
  - The central bank should monitor the macroeconomic environment and adjust policy instruments to maintain price stability and manage economic fluctuations; if financial conditions tighten (loosen) from CBDC issuance, the central bank can lower (increase) the policy rate to offset the impact and communicate rationale.

### Transmission channels of monetary policy and CBDC effects
- Definition: Transmission is stronger (weaker) if a given change in the tightness of financial conditions has larger (smaller) effects on macro variables in an economy with a CBDC than without.
- Main channels (Figure 8):
  - Interest rate channel: policy rate changes induce changes in overall interest rates, affecting aggregate demand via credit demand and borrowers’ available income.
  - Bank lending channel: changes in policy rate affect banks’ cost of funds, balance sheets, profits, non–deposit funding costs, credit supply, and lending rates/standards.
  - Asset price channel: changes in policy rate affect asset prices and collateral values, altering borrowers’ net worth and financing costs.
  - Exchange rate channel: policy rate changes affect exchange rate via uncovered interest parity, influencing net exports and, for economies with foreign-currency balance sheet exposure, wealth effects.
- CBDC-induced impacts on transmission (Figure 9 and discussion):
  - Increased competition for deposit funding → strengthens interest rate and bank lending channels (greater pass-through from policy rates to deposit rates under less bank market power).
  - Increased wholesale funding → strengthens the bank lending channel (wholesale funding costs more sensitive to policy rate; uninsured wholesale markets are sensitive to bank balance-sheet changes).
  - Lower bank profits → potentially asymmetric but relatively small effect on interest rate channel: banks may raise rates when policy rate increases to protect margins.
  - Higher financial inclusion → strengthens interest rate and asset price channels via broader access to interest-sensitive borrowing and saving instruments; aggregate impact limited by financially excluded population’s share of total saving/borrowing.
  - Increased monetary autonomy from reduced dollarization/cryptoization → amplifies all transmission channels by sustaining demand for central bank money and monetary sovereignty.
  - Exchange rate channel → unlikely to experience additional effects; basic uncovered interest parity relationship between interest rates and exchange rate is expected to remain unaffected.

*FINTECH NOTES — Implications of CBDCs for Monetary Policy Transmission. International Monetary Fund.*

### Box 1. Lessons from the US Overnight Reverse

### Box 1. Lessons from the US Overnight Reverse Repurchase Agreement Facility

### Overview of the ON RRP facility
- The Overnight Reverse Repurchase Agreement (ON RRP) facility in the United States provides nonbank financial firms direct access to the central bank balance sheet.
- The ON RRP facility offers US Treasury–backed repos to money market funds, allowing them to deposit funds overnight with the Fed.
- The ON RRP facility offers returns close to the policy rate. The administered rate is set at the bottom of the target range for the federal funds rate, below the rate on balances held at the Federal Reserve Banks (IORB).

### Similarities to a CBDC and effects on banks
- The ON RRP facility has the potential to disintermediate banks and reduce the supply of deposits by providing a safe and risk-free alternative investment to a broad base of money market investors.
- Key distinction: ON RRP is not a retail facility directly available to the general public, unlike a retail CBDC.
- Empirical effects to date:
  - Bank deposit interest rates do not seem to be more sensitive to the policy rate since the introduction of ON RRP.
  - The overall impact on the banking sector so far has not led to a significant contraction in bank deposit supply.
  - The facility can crowd out private repo (Anderson and Kandrac 2017; Infante 2020).

### Implications for monetary policy operations and the central bank balance sheet
- Interest rate–based operational frameworks can be designed as corridor or floor systems (see Figure 10 in source). In a corridor system the discount rate is set above the target interest rate and the interest rate on reserves is set below it. In a floor system, bank reserves are remunerated at the policy rate.
- Regime-specific operational points:
  - In a mid-corridor system targeting a market rate (Regime 1), CBDC demand is an autonomous factor that might complicate the forecasting of liquidity necessary to optimize open market operations. Volatility of demand might increase more during crisis times. Central banks could temporarily switch to a full-allotment regime if needed.
  - Otherwise, monetary policy operations could continue largely unchanged with CBDCs. Central banks should be able to affect term spreads through communication and retain control of interest rates on reserves, provided banks continue to demand reserve balances to settle payments.
- Balance sheet and asset-side implications:
  - The size of the central bank balance sheet could grow considerably if the CBDC replaces deposits to a large extent.
  - Central banks’ demand for government bonds is likely to increase to balance the increase in their CBDC liabilities. Available evidence suggests price impacts on yields would be marginal, though in countries with much smaller government bond markets the impact could be greater.
  - Seigniorage implications:
    - A large balance sheet increases seigniorage (Bindseil 2016), but larger balance sheets raise interest rate, foreign exchange, and default risks that boil down to higher leverage (Hall and Reis 2015). Losses could undermine central bank independence (Ishi, Fujita, and Stone 2011).
    - If a CBDC is nonremunerated, seigniorage could be expected to grow.
  - Example quantitative indication: The estimated effects of quantitative easing equal to 1 percent of GDP on 10-year US Treasury yields typically lie in the neighborhood of 4 to 5 basis points (see Williams 2011). However, purchases to balance CBDC liabilities would presumably fall heavily on shorter maturity instruments, so effects on yields would likely be much smaller.

### Risks in low-rate environments and crises; mitigation
- An unremunerated CBDC could entrench the zero lower bound for interest rates. In case of an unremunerated CBDC without holding limits, there could be no other asset with a negative interest rate (Jamet and others 2022). CBDC would not bear the storage costs that apply to physical cash, raising the effective lower bound (Armelius and others 2018).
- Under financial market stress, retail deposit flight into CBDCs could strengthen competition for bank deposit funding, increase wholesale funding needs, and reduce bank profits, amplifying transmission effects.
- It may be hard to gauge how low the policy rate can be set before broad-based disintermediation becomes significant; runs can evolve rapidly due to new technologies and social media (for example, Silicon Valley Bank).
- Mitigation: Concerns would be significantly reduced if effective limits are placed on how much CBDC can be held.
- Operational and reputational risks: Technical failures, cyberattacks, loss of user funds, or breaches of confidential user data could pose reputational risks that undermine central bank credibility and thereby affect inflation expectations and monetary policy effectiveness.

### Effects across monetary regimes
- Exchange rate management:
  - A well-known implication is some loss of independent monetary policy; a strict peg fully sacrifices independent monetary policy when there is no restriction on cross-border capital flows.
  - There is likely no significant effect on the ability to undertake FX interventions in a managed exchange rate regime unless CBDCs lead to a more open capital account by making it easier for foreigners to hold domestic currency and vice versa.
- Monetary targeting:
  - CBDC adoption could inject instability in the velocity of money, challenging monetary targeting that relies on a stable relationship between M0 growth and broader aggregates (M2).
  - CBDCs could stimulate financial innovation and reduce cash handling costs, potentially increasing transaction frequency; however, other factors such as interest rates and the economic outlook are likely more decisive and CBDC issuance is unlikely to have a significant effect (Wen and Arias 2014).
- Overall: CBDCs could amplify international spillovers and increase international linkages (Ferrari, Mehl, and Stracca 2022).

### Remunerated CBDCs and foreign CBDCs
- Remunerated CBDCs:
  - Introduces a risk-free and highly liquid overnight government debt instrument that could meet demand for short-duration safe assets, reduce the convenience yield of such assets, and raise the neutral rate of interest, r*, potentially reducing zero lower bound episodes (Gorton and Ordoñez 2022).
  - Could boost capital market development by providing a new overnight asset, strengthening interest rate and asset price channels and the exchange rate channel through more fluid cross-border arbitrage.
  - An interest-bearing CBDC with a variable interest rate linked to the policy rate could serve as an additional policy tool and be a closer substitute to deposits, possibly forcing banks to react more strongly to changes in the policy rate and improving transmission.
  - Interest-bearing CBDCs could support negative interest-rate policy to enlarge policy space, provided the public cannot shift into large holdings of zero interest-rate assets such as cash (Armelius and others 2018).
- Foreign CBDCs:
  - If a foreign CBDC is available domestically, monetary policy effectiveness and autonomy could be significantly impaired. Restrictions on foreign CBDC usage (holding or transaction caps) could alleviate effects.
  - Foreign CBDCs could increase the risk of currency substitution, especially in smaller developing countries concerned about domestic currency stability and inflation.
  - CBDCs can amplify international spillovers and increase international linkages, potentially weakening domestic monetary policy transmission and autonomy and warranting capital flow management measures (He and others 2023).
  - If a domestic CBDC could be held in large quantities abroad, domestic central bank balance sheets could face large fluctuations from changing external demand, affecting market liquidity and the availability and price of domestic safe assets, with further complications for financial stability and central bank operations (He and McCauley 2010).

*Source: Box 1, "Lessons from the US Overnight Reverse Repurchase Agreement Facility," ftnea2023010.*

### References

### References

### CBDC design, features, and financial-stability implications
- Agur, Itai   , Anil Ari, and Giovanni Dell’Ariccia. 2022. “Designing Central Bank Digital Currencies.” Journal of Monetary Economics 125: 62–79.
- Ahnert, Toni, Katrin Assenmacher, Peter Hoffmann, Agnese Leonello, Cyril Monet, and Davide Porcellacchia. 2022. “The Economics of Central Bank Digital Currency.” ECB Working Paper 2713, European Central Bank, Frankfurt am Main, Germany.
- Armas, Adrian, and Manmohan Singh. 2022. “Digital Money and Central Banks Balance Sheet.” IMF Working Paper 2022/206, International Monetary Fund, Washington, DC.
- Armelius, Hanna, Paola Boel, Carl Andreas Claussen, and Marianne Nessén. 2018. “The e-Krona and the Macroeconomy.” Sveriges Riksbank Economic Review 3: 43–65.
- Bank for International Settlements (BIS). 2020. “Central Bank Digital Currencies: Foundational Principles and Core Features.” https://www.bis.org/publ/othp33.htm.
- Bank for International Settlements (BIS). 2021. “Central Bank Digital Currencies: Financial Stability Implications.” https://www.bis.org/publ/othp42_fin_stab.pdf.
- Bindseil, Ulrich. 2020. “Tiered CBDC and the Financial System.” ECB Working Paper 2351, European Central Bank, Frankfurt am Main, Germany.
- Bouis, R., G. Gelos, P. Miettinen, F. Nakamura, E. Nier, and G. Soderberg. 2023. “Central Bank Digital Currencies and Financial Stability: Scenarios and Policy Choices,” Forthcoming.
- Chang, Huifeng, Lucyna Gornicka, Federico Grinberg, Marcello Miccoli, and Brandon Tan. (2023). “CBDC and Banking Disintermediation in    A Portfolio Choice Model.” Forthcoming IMF Working Paper.
- Chapman, James, Jonathan Chiu, Mohammad Davoodalhosseini, Janet Jiang, Francisco Rivadeneyra, and Yu Zhu. 2023. “Central Bank Digital Currencies and Banking: Literature Review and New Questions.” Bank of Canada Staff Discussion Paper 2023-4, Bank of Canada, Ottawa.
- Chiu, Jonathan, Seyed Davoodalhosseini, Janet Jiang, and Yu Zhu. 2023. “Bank Market Power and Central Bank Digital Currency: Theory and Quantitative Assessment.” Journal of Political Economy 131 (5): 1213–48.
- Davoodalhosseini, Seyed Mohammadreza. 2021. “Central Bank Digital Currency and Monetary Policy.” Journal of Economic Dynamics and Control 142: e104150. https://doi.org/10.1016/j.jedc.2021.104150.
- Ferrari, Massimo Minesso, Arnaud Mehl, and Livio Stracca. 2022. “Central Bank Digital Currency in an Open Economy.” Journal of Monetary Economics 127: 54–68.
- Jamet, Jean-François, Arnaud Mehl, Cyril Max Neumann, and Fabio Panetta. 2022. “Monetary Policy and Financial Stability Implications of Central Bank Digital Currencies.” VoxEU Column, Monetary Policy, Aril 13, 2022. https://cepr.org/voxeu/columns/monetary-policy-and-financial-stability-implications-central-bank-digital-currencies.
- Jiang, Janet, and Yu Zhu. 2021. “Monetary Policy Pass-Through with Central Bank Digital Currency.” Staff Working Paper 21-10, Bank of Canada, Ottawa.
- Keister, T. and Monnet, C. (2022), “Central Bank Digital Currency: Information and Stability”, Journal of Economic Dynamics and Control 142: 104501.
- Keister, Todd, and Daniel Sanches. 2023. “Should Central Banks Issue Digital Currency?” Review of Economic Studies 90 (1): 404–31.
- Li, Jiaqi. 2023. “Predicting the Demand for Central Bank Digital Currency: A Structural Analysis with Survey Data.” Journal of Monetary Economics 134: 73–85.
- Mancini Griffoli, Tommaso, Maria Soledad Martinez Peria, Itai Agur, Anil Ari, John Kiff, Adina Popescu, and Celine Rochon. 2018. “Casting Light on Central Bank Digital Currencies.” IMF Staff Discussion Notes 2018/08, International Monetary Fund, Washington, DC.
- Niepelt, Dirk  . 2020. “Reserves for All? Central Bank Digital Currency, Deposits, and Their (Non)-Equivalence.” International Journal of Central Banking 16 (3): 211–38.
- Panetta, Fabio. 2021. “Central Bank Digital Currencies: A Monetary Anchor for Digital Innovation.” Speech delivered November 5, 2021, at the Elcano Royal Institute, Madrid. European Central Bank. https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp211105~08781cb638.en.html.
- Tan, Brandon. 2023a. “Central Bank Digital Currency Adoption: A Two-Sided Model.” IMF Working Paper 2023/127, International Monetary Fund, Washington, DC.
- Tan, Brandon. 2023b. “Central Bank Digital Currency and Financial Inclusion.” IMF Working Paper 2023/069, International Monetary Fund, Washington, DC.
- Whited, Toni, Yufeng Wu, and Kairong Xiao. 2023. “Central Bank Digital Currency and Banks." Working Paper.

### Monetary policy transmission, unconventional policy, and macro-financial interactions
- Abadi, Joseph, Markus Brunnermeier, and Yann Koby. 2023. “The Reversal Interest Rate.” American Economic Review 113 (8): 2084–120.
- Anderson, Richard G., Michael Bordo, and John V. Duca. 2016. “Money and Velocity During Financial Crises: From the Great Depression to the Great Recession.” NBER Working Paper 22100, National Bureau of Economic Research, Cambridge, MA.
- Anderson, Alyssa, and John Kandrac. 2017. “Monetary Policy Implementation and Financial Vulnerability: Evidence from the Overnight Repurchase Facility.” Review of Financial Studies 31 (9): 3643–86.
- Bernanke, Ben. 2007. “The Financial Accelerator and The Credit Channel (Speech 296).” Speech presented at the Board of Governors of the Federal Reserve System (US). https://ideas.repec.org/p/fip/fedgsq/296.html#author-abstract.
- Bindseil, Ulrich. 2016. “Evaluating Monetary Policy Operational Frameworks.” Federal Reserve Bank of Kansas City. https://www.kansascityfed.org/documents/7036/BindseilPaper_JH2016.pdf.
- Brandao Marques, Luis, Yi Xue, R. G. Gelos, Ratna Sahay, and Thomas Harjes. 2020. “Monetary Policy Transmission in Emerging Markets and Developing Economies.” IMF Working Paper 2020/035, International Monetary Fund, Washington, DC.
- Drechsler, Itamar, Alexi Savov, and Philipp Schnabl. 2021. “Banking on Deposits: Maturity Transformation without Interest Rate Risk.” The Journal of Finance 76 (3): 1091–143.
- Gertler, Mark, Nobuhiro Kiyotaki, and Andrea Prestipino. 2020. “A Macroeconomic Model with Financial Panics.” Review of Economic Studies 87 (1): 240–88.
- Hall, Robert E., and Ricardo Reis. 2015. “Maintaining Central-Bank Financial Stability under New-Style Central Banking.” NBER Working Paper 21173, National Bureau of Economic Research, Cambridge, MA.
- Ishi, Kotaro, Kenji Fujita, and Mark R. Stone. 2011. “Should Unconventional Balance Sheet Policies Be Added to the Central Bank Toolkit? A Review of the Experience So Far.” IMF Working Paper 2011/145, International Monetary Fund, Washington, DC.
- Kashyap, Anil K.,  and Jeremy C. Stein. 1995. “The Impact of Monetary Policy on Bank Balance Sheets.” Carnegie-Rochester Conference Series on Public Policy 42:151–95.
- Wen, Yi, and Maria A. Arias. 2014. “What Does Money Velocity Tell Us about Low Inflation in the U.S.?” On the Economy Blog, Federal Reserve Bank of St. Louis, September 1. https://www.stlouisfed.org/on-the-economy/2014/september/what-does-money-velocity-tell-us-about-low-inflation-in-the-us.
- Williams, John C. 2011. “Unconventional Monetary Policy: Lessons from the Past Three Years.” Presentation to the Swiss National Bank Research Conference, Zurich, Switzerland, September 23. https://www.frbsf.org/our-district/press/presidents-speeches/williams-speeches/williams-speeches/2011/september/williams-unconventional-monetary-policy/.

### Banking markets, deposit behavior, and funding risks
- Berger, Allen. 1991. “Market Discipline in Banking.” Proceedings of the 27th Conference on Bank Structure and Competition, Federal Reserve Bank of Chicago, Chicago, IL. https://econpapers.repec.org/paper/fipfedhpr/328.htm.
- Chiu, Ching-Wai (Jeremy), and John Hill. 2018. “The Rate Elasticity of Retail Deposits in the United Kingdom: A Macroeconomic Investigation.” International Journal of Central Banking 14 (2): 113–58.
- Drechsler, Itamar, Alexi Savov, and Philipp Schnabl. 2021. “Banking on Deposits: Maturity Transformation without Interest Rate Risk.” The Journal of Finance 76 (3): 1091–143.
- Gorton, Gary, and Guillermo Ordoñez. 2022. “The Supply and Demand for Safe Assets.” Journal of Monetary Economics 125 (C): 132–47.
- Huang, Rocco, and Lev Ratnovski. 2011. “The Dark Side of Bank Wholesale Funding.” Journal of Financial Intermediation 20 (2): 248–63.
- Infante, Sebastian. 2020. “Private Money Creation with Safe Assets and Term Premia.” Journal of Financial Economics 136 (3): 828–56.
- Keister, Todd, and Daniel Sanches. 2023. “Should Central Banks Issue Digital Currency?” Review of Economic Studies 90 (1): 404–31.
- Niepelt, Dirk  . 2020. “Reserves for All? Central Bank Digital Currency, Deposits, and Their (Non)-Equivalence.” International Journal of Central Banking 16 (3): 211–38.

### Payments, costs, and financial inclusion
- Álvez, Marcelo, Rodrigo Lluberas, and Jorge Ponce. 2018. “The Cost of Using Cash and Checks in Uruguay.” Working Paper 004-2019, Central Bank of Uruguay, Montevideo.
- Banka, Holti. 2018. “Initial Findings from the Implementation of the ‘Practical Guide for Measuring Retail Payment Costs.’” World Bank Blogs, May 28. https://blogs.worldbank.org/psd/initial-findings-implementation-practical-guide-measuring-retail-payment-costs.
- Hasan, Iftekhar, Tania De Renzis, and Heiko Schmiedel. 2013. “Retail Payments and the Real Economy.” European Central Bank Working Paper 1572, European Central Bank, Frankfurt am Main, Germany.
- Kosse, Anneke, Heng Chen, Marie-Hélène Felt, Valéry Dongmo Jiongo, Kerry Nield, and Angelika Welte. 2017. “The Costs of Point-of-Sale Payments in Canada.” Bank of Canada Staff Discussion Paper 2017-4, Bank of Canada, Ottawa.
- Kosse, Anneke, and Ilaria Mattei. 2023. “Making Headway: Results of the 2022 BIS Survey on Central Bank Digital Currencies and Crypto.” BIS Paper 136, Bank of International Settlements, Basel, Switzerland.
- Lannquist, Ashley, and Brandon Tan. 2023. “CBDC's Role in Promoting Financial Inclusion.” Forthcoming IMF Fintech Note.
- Mehra, [Note: entry not present in source beyond listed items] [skip if not in source]
- Ouyang, Shumaio. (2021). "Cashless Payment and Financial Inclusion." Working Paper.
- Tan, Brandon. 2023b. “Central Bank Digital Currency and Financial Inclusion.” IMF Working Paper 2023/069, International Monetary Fund, Washington, DC.

### Country-specific and empirical studies
- Anand, Ishan, and Anjana Thampi. 2016. “Recent Trends in    Wealth Inequality in India.” Economic and Political Weekly 51: 59–67.
- Álvez, Marcelo, Rodrigo Lluberas, and Jorge Ponce. 2018. “The Cost of Using Cash and Checks in Uruguay.” Working Paper 004-2019, Central Bank of Uruguay, Montevideo.
- Kosse, Anneke, Heng Chen, Marie-Hélène Felt, Valéry Dongmo Jiongo, Kerry Nield, and Angelika Welte. 2017. “The Costs of Point-of-Sale Payments in Canada.” Bank of Canada Staff Discussion Paper 2017-4, Bank of Canada, Ottawa.
- Panetta, Fabio. 2021. “Central Bank Digital Currencies: A Monetary Anchor for Digital Innovation.” Speech delivered November 5, 2021, at the Elcano Royal Institute, Madrid. European Central Bank. https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp211105~08781cb638.en.html.

### Theoretical models, wealth, and savings behavior
- Fagereng, Andreas, Martin Blomhoff Holm, Benjamin Moll, and Gisle Natvik. 2019. “Saving Behavior across the Wealth Distribution: The Importance of Capital Gains.” NBER Working Paper 26588, National Bureau of Economic Research, Cambridge, MA.
- Gertler, Mark, Nobuhiro Kiyotaki, and Andrea Prestipino. 2020. “A Macroeconomic Model with Financial Panics.” Review of Economic Studies 87 (1): 240–88.
- Infante, Sebastian. 2020. “Private Money Creation with Safe Assets and Term Premia.” Journal of Financial Economics 136 (3): 828–56.
- Li, Jiaqi. 2023. “Predicting the Demand for Central Bank Digital Currency: A Structural Analysis with Survey Data.” Journal of Monetary Economics 134: 73–85.

*Implications of Central Bank Digital Currencies for Monetary Policy Transmission NOTE/2023/010*

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_Source: https://www.imf.org/-/media/files/publications/ftn063/2023/english/ftnea2023010.pdf_