Broadening narrow money: monetary policy with a central bank digital currency

Working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 18 May 2018

Staff Working Paper No. 724
By Jack Meaning, Ben Dyson, James Barker and Emily Clayton

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.

PDFBroadening narrow money: monetary policy with a central bank digital currency

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