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SMU SOE Seminar (April 12, 2023): Bank Market Power and Central Bank Digital Currency: A Case of Imperfect Substitution
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TOPIC:
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BANK MARKET POWER AND CENTRAL BANK DIGITAL CURRENCY: A CASE OF IMPERFECT SUBSTITUTION
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ABSTRACT
This paper studies the effect of a central bank digital currency (CBDC) on bank intermediation when the CBDC is an imperfect substitute for bank deposits and the deposit market is imperfectly competitive. We show that a CBDC can promote bank intermediation and output if the CBDC rate is in some intermediate range. A CBDC that is a better substitute has larger positive effects. It can raise lending and output by more. It starts to increase lending and output at a lower interest rate and it promotes intermediation and output for a wider range of interest rates. Therefore, to better reap the benefit of a CBDC, it should be designed as a close substitute to bank deposits.
Click here to view the CV.
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PRESENTER
Yu Zhu
Renmin University of China
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RESEARCH FIELDS
Monetary Economics
Digital Currency
Theoretical Econometrics
Applied Econometrics
Empirical Auctions
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DATE:
12 April 2023 (Wednesday)
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TIME:
4pm - 5.30pm
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VENUE:
Meeting Room 5.1, Level 5
School of Economics
Singapore Management University
90 Stamford Road
Singapore 178903
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