Central bank digital currency: Payment choices and commercial bank profitability

【Author】 Son, Jaemin; Ryu, Doojin; Webb, Robert I.

【Source】INTERNATIONAL REVIEW OF FINANCIAL ANALYSIS

【影响因子】8.235

【Abstract】This study examines how the issuance of a central bank digital currency (CBDC) affects consumers' payment instrument choices, asset allocation decisions, and the profitability of financial intermediaries. Specifically, we advance a theoretical model in which introducing an interest-bearing CBDC expands market participants' payment and investment options but also poses a potential threat to financial intermediaries if it raises their borrowing costs significantly. The existence of a network externality further complicates the analysis by affecting consumers' choice of payment mechanism. Our results suggest that the issuance of a CBDC is a double-edged sword for an economy. Although it provides additional payment and investment options for market participants, it increases competition and weakens financial intermediaries' margins.

【Keywords】Central bank digital currency; Financial stability; Interest rate; Payment instrument

【发表时间】2023 NOV

【收录时间】2023-10-13

【文献类型】实证数据

【主题类别】

区块链治理-市场治理-CBDC