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Central bank digital currencies: The case of universal central bank reserves

Author

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  • Paolo Fegatelli
Abstract
We analyse several motivations for the introduction of a widely accessible central bank digital currency (CBDC). If a central bank decided to offer a CBDC, its design would have to consider different areas of central bank activity, taking into account multiple policy principles, objectives and constraints. In addition, the introduction of a CBDC on a large scale may have a non-trivial impact on the architecture of the financial system. From this perspective, some common arguments in favour of CBDC may seem simplistic and the field of feasible options may be narrower than often believed. We reconsider Tobin’s idea to establish a system of universal access to central bank reserves, and clarify its feasibility and advantages as an account-based CBDC.

Suggested Citation

  • Paolo Fegatelli, 2019. "Central bank digital currencies: The case of universal central bank reserves," BCL working papers 130, Central Bank of Luxembourg.
    • Handle: RePEc:bcl:bclwop:bclwp130
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    File URL: https://www.bcl.lu/en/publications/Working-papers/130/BCLWP130.pdf
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    Cited by:

    1. Paolo Fegatelli, 2021. "The one trillion euro digital currency: How to issue a digital euro without threatening monetary policy transmission and financial stability?," BCL working papers 155, Central Bank of Luxembourg.
    2. Sigitas Siaudinis, 2019. "Digital Currencies and Central Banking: A Sense of Déjà Vu," Bank of Lithuania Occasional Paper Series 26, Bank of Lithuania.
    3. Fegatelli, Paolo, 2022. "A central bank digital currency in a heterogeneous monetary union: Managing the effects on the bank lending channel," Journal of Macroeconomics, Elsevier, vol. 71(C).
    4. Fegatelli, Paolo, 2024. "Monetary policy and reserve requirements with a zero-interest digital euro," Journal of Macroeconomics, Elsevier, vol. 80(C).

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    More about this item

    Keywords

    Central bank digital currency; universal central bank reserves; deposited currency accounts; cash; central bank; central bank policies; monetary policy; financial stability; payment systems; deposit insurance; bank deposits; inside money; collateral; virtual currencies;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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