Broadening Narrow Money: Monetary Policy with a Central Bank Digital Currency

36 Pages Posted: 25 May 2018

See all articles by Jack Meaning

Jack Meaning

Bank of England

Ben Dyson

Bank of England

James Barker

University of Exeter

Emily Clayton

Bank of England

Date Written: May 18, 2018

Abstract

This paper discusses central bank digital currency (CBDC) and its potential impact on the monetary transmission mechanism. We first offer a general definition of CBDC which should make the concept accessible to a wide range of economists and policy practitioners. We then investigate how CBDC could affect the various stages of transmission, from markets for central bank money to the real economy. We conclude that monetary policy would be able to operate much as it does now, by varying the price or quantity of central bank money, and that transmission may even strengthen for a given change in policy instruments.

Keywords: Central bank digital currency, money, monetary policy, cryptocurrency

JEL Classification: E42, E52, E58

Suggested Citation

Meaning, Jack and Dyson, Ben and Barker, James and Clayton, Emily, Broadening Narrow Money: Monetary Policy with a Central Bank Digital Currency (May 18, 2018). Bank of England Working Paper No. 724. Available at SSRN: https://ssrn.com/abstract=3180720 or http://dx.doi.org/10.2139/ssrn.3180720

Jack Meaning (Contact Author)

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Ben Dyson

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

James Barker

University of Exeter ( email )

Northcote House
The Queen's Drive
Exeter, Devon EX4 4QJ
United Kingdom

Emily Clayton

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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