Effects of CBDC on lending depend on level of competition – BoC researchers

CBDC could increase bank lending if banks have some market power, researchers say

Digital currency

The effects of a central bank digital currency on bank lending depend heavily on the level of competition in the sector, researchers from the Bank of Canada find.

In a paper, Jonathan Chiu et al. use a model to analyse whether introducing a CBDC causes disintermediation of banks.

Under a scenario where banks have no market power, the authors find a CBDC could increase competition for deposits and reduce bank lending.

However, where banks have market power, they find a CBDC could have the

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Central Banking? View our subscription options

Register for Central Banking

All fields are mandatory unless otherwise highlighted

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account

.