00000nam 2200000zi 4500 9.942600 CaOODSP 20240829112353 m o d f cr mn||||||||| 240829t20242024onca ob f000 0 eng d CaOODSP eng rda CaOODSP eng eng fre FB3-5/2024-27E-PDF Bhattarai, Saroj, 1981- author. Central bank digital currency and transmission of monetary policy / by Saroj Bhattarai, Mohammad Davoodalhosseini and Zhenning Zhao. [Ottawa] : Bank of Canada = Banque du Canada, 2024. ©2024 1 online resource (iii, 63, that is, iii, 62 pages) : colour illustrations. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2024-27 ISSN assigned to different series. "Last updated: July 25, 2024." Includes bibliographical references (pages 32-33). "How does the transmission of monetary policy change when a central bank digital currency (CBDC) is introduced in the economy? Do aspects of CBDC design, such as how substitutable it is with bank deposits and whether it is interest bearing, matter? We study these questions in a general equilibrium model with nominal rigidities, liquidity frictions, and a banking sector where commercial banks face a leverage constraint. In the model, CBDC and commercial bank deposits can be used as a means of payments, and they provide liquidity services to households. Banks issue deposits and extend loans to firms, and bank deposits are backed by loans and central bank reserves. We find that the effects of a canonical monetary policy shock, a shock to the Taylor rule that governs interest on central bank reserves, is magnified with the introduction of a fixed-interest-rate CBDC. More generally, whether CBDC magnifies or abates the response of the economy depends on the type of shock (e.g., interest rate or quantity of reserves shock). We also find that the response of the economy depends on the monetary policy framework—whether the central bank implements monetary policy through reserves or through CBDC—as well as central bank balance sheet rules that govern the quantity of CBDC and reserves"--Abstract, page ii. Includes abstracts in English and French. Banks and banking, Central Econometric models. Digital currency Econometric models. Transmission mechanism (Monetary policy) Econometric models. Banques centrales Modèles économétriques. Monnaie électronique Modèles économétriques. Mécanismes de transmission (Politique monétaire) Modèles économétriques. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2024-27. (CaOODSP)9.806221 PDF 1.83 MB https://publications.gc.ca/collections/collection_2024/banque-bank-canada/FB3-5-2024-27-eng.pdf