Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297452 
Year of Publication: 
2024
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2024-4
Publisher: 
Bank of Canada, Ottawa
Abstract: 
To what extent does a central bank digital currency (CBDC) compete with bank deposits? To answer this question, we develop and estimate a structural model where each household chooses which financial institution to deposit their digital money with. Households value the interest paid on digital money, the possibility of obtaining complementary financial products, and the access to in-branch services. A non-interest-bearing CBDC that does not provide complementary financial products can substantially crowd out bank deposits only if it provides an extensive service network. Imposing a large limit on CBDC holding would effectively mitigate this crowding out.
Subjects: 
Central bank research
Digital currencies and fintech
JEL: 
E50
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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