{
  "title": "Designing Central Bank Digital Currencies",
  "publication": "IMF Working Papers, November 18, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/11/18/designing-central-bank-digital-currencies-48739",
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  "summary": "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 the",
  "sections": [
    {
      "heading": "Core framework and mechanisms",
      "content": "- Agents sort into cash, CBDC and bank deposits according to their preferences over anonymity and security.\n- Network effects make the convenience of payment instruments dependent on the number of their users.\n- CBDC can be designed with attributes similar to cash or deposits, and can be interest-bearing."
    },
    {
      "heading": "Key findings",
      "content": "- A CBDC that closely competes with deposits depresses bank credit and output.\n- A cash-like CBDC may lead to the disappearance of cash.\n- The optimal CBDC design trades off bank intermediation against the social value of maintaining diverse payment instruments.\n- When network effects matter, an interest-bearing CBDC alleviates the central bank's tradeoff between preserving bank intermediation and payment-instrument diversity."
    },
    {
      "heading": "Policy implications and design trade-offs",
      "content": "- Central banks face a trade-off between supporting bank intermediation (to sustain bank credit and output) and preserving a diversity of payment instruments (including cash).\n- Designing CBDC attributes (cash-like vs deposit-like) and whether to make CBDC interest-bearing are central policy levers to manage that trade-off.\n- Consideration of network effects is important: if convenience depends on user adoption, an interest-bearing CBDC can mitigate negative effects on bank intermediation."
    },
    {
      "heading": "Publication and metadata (exact)",
      "content": "- Authors: Itai Agur, Anil Ari, Giovanni Dell'Ariccia\n- Publication date: November 18, 2019\n- Series: Working Paper No. 2019/252\n- Issue: 252\n- Volume: 2019\n- Pages: 38\n- DOI: https://doi.org/10.5089/9781513519883.001\n- Stock No: WPIEA2019252\n- ISBN: 9781513519883\n- ISSN: 1018-5941\n- Subjects: Bank deposits, Banking, Central Bank digital currencies, Currencies, Deposit rates, Financial markets, Financial services, Money, Payment systems, Technology\n- Keywords: Bank deposits, cash equilibrium, cash holder, CBDC design, CBDC interest rate, CBDC rate, CBDC risk, central bank, Central Bank digital currencies, Currencies, Deposit rates, interest rate, interest-bearing CBDC, market power, Payment systems, WP\n\nSource: IMF Working Papers — \"Designing Central Bank Digital Currencies\" by Itai Agur, Anil Ari, and Giovanni Dell'Ariccia, November 18, 2019.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/11/18/designing-central-bank-digital-currencies-48739"
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    "Authors: Itai Agur, Anil Ari, Giovanni Dell'Ariccia",
    "Published: November 18, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513519883.001",
    "Agents sort into cash, CBDC and bank deposits according to their preferences over anonymity and security.",
    "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.",
    "A cash-like CBDC may lead to the disappearance of cash.",
    "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 between preserving bank intermediation and payment-instrument diversity.",
    "Central banks face a trade-off between supporting bank intermediation (to sustain bank credit and output) and preserving a diversity of payment instruments (including cash).",
    "Designing CBDC attributes (cash-like vs deposit-like) and whether to make CBDC interest-bearing are central policy levers to manage that trade-off.",
    "Consideration of network effects is important: if convenience depends on user adoption, an interest-bearing CBDC can mitigate negative effects on bank intermediation.",
    "Authors: Itai Agur, Anil Ari, Giovanni Dell'Ariccia",
    "Publication date: November 18, 2019",
    "Series: Working Paper No. 2019/252",
    "Issue: 252",
    "Volume: 2019",
    "Pages: 38",
    "DOI: https://doi.org/10.5089/9781513519883.001",
    "Stock No: WPIEA2019252",
    "ISBN: 9781513519883",
    "ISSN: 1018-5941",
    "Subjects: Bank deposits, Banking, Central Bank digital currencies, Currencies, Deposit rates, Financial markets, Financial services, Money, Payment systems, Technology",
    "Keywords: Bank deposits, cash equilibrium, cash holder, CBDC design, CBDC interest rate, CBDC rate, CBDC risk, central bank, Central Bank digital currencies, Currencies, Deposit rates, interest rate, interest-bearing CBDC, market power, Payment systems, WP",
    "**Working Paper**"
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