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%T Will Central Bank Digital Currency Disintermediate Banks? %A Whited, Toni M. %A Wu, Yufeng %A Xiao, Kairong %P 55 %V 47 %D 2023 %K central bank digital currency; banking competition; maturity mismatch; financial stability %~ IHS (Wien) %> https://nbn-resolving.org/urn:nbn:de:0168-ssoar-90145-8 %X We estimate a dynamic banking model to quantify the impact of a central bank digital currency (CBDC) on the banking system. Our counterfactuals show that a one-dollar introduction of CBDC replaces bank deposits by around 80 cents on the margin. Bank lending falls by one-fourth of the drop in deposits because banks partially replace lost deposits with wholesale funding. This substitution raises banks’ interest-rate risk exposure and lowers their resilience to negative equity shocks. If CBDC bears interest or is intermediated through banks, it captures a greater deposit market share, amplifying the impact on lending. The effect on lending is amplified for small banks, for which wholesale funding is more expensive. %C AUT %C Wien %G en %9 Arbeitspapier %W GESIS - http://www.gesis.org %~ SSOAR - http://www.ssoar.info