Broadening Narrow Money: Monetary Policy with a Central Bank Digital Currency
36 Pages Posted: 25 May 2018
Date Written: May 18, 2018
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: Suggested Citation