Digital Currencies and Bank Competition

63 Pages Posted: 3 Sep 2020 Last revised: 31 Mar 2021

See all articles by Marianne Verdier

Marianne Verdier

Université Paris 2 Panthéon Assas

Date Written: August 14, 2020


This article examines how the issuance of a Digital Currency by a non-bank operator impacts competition between banks in a cashless society. I analyze how the fee charged for the digital currency impacts the interest rates on loans and the fees charged by banks to depositors for paying by card and opening an account in a bank. I derive the conditions under which consumers use the digital currency to pay. I also discuss how the distribution mode of the digital currency may impact its use for payments.

Keywords: CBDC, digital currencies, payment cards, money demand, banking markets

JEL Classification: G21, L31, L42

Suggested Citation

Verdier, Marianne, Digital Currencies and Bank Competition (August 14, 2020). Available at SSRN: or

Marianne Verdier (Contact Author)

Université Paris 2 Panthéon Assas ( email )


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