<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This paper delves into the relationship between the issuance of Central Bank Digital Currencies (CBDC) and the likelihood of banking panic. The issuance of CBDC acts as a disturbing shock that incentivizes depositors to withdraw all/part of their deposits from the commercial banks, to swap it for CBDC which are offered by the central bank. We determine a variety of tools that central banks can use in order for the issuance of CBDC to act as a stabilizing factor of the banking system (by reducing the likelihood of banking panic).</p>
</abstract>

This paper delves into the relationship between the issuance of Central Bank Digital Currencies (CBDC) and the likelihood of banking panic. The issuance of CBDC acts as a disturbing shock that incentivizes depositors to withdraw all/part of their deposits from the commercial banks, to swap it for CBDC which are offered by the central bank. We determine a variety of tools that central banks can use in order for the issuance of CBDC to act as a stabilizing factor of the banking system (by reducing the likelihood of banking panic).

Could the Issuance of CBDC Reduce the Likelihood of Banking Panic?<sup>1</sup>

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

Could the Issuance of CBDC Reduce the Likelihood of Banking Panic?

This paper delves into the relationship between the issuance of Central Bank Digital Currencies (CBDC) and the likelihood of banking panic. The issuance of...

Could the Issuance of CBDC Reduce the Likelihood of Banking Panic?¹

Publié en ligne: 24 mai 2023

Pages: 83 - 101

Reçu: 08 févr. 2022

Accepté: 13 juin 2022

DOI: https://doi.org/10.2478/jcbtp-2023-0015

Mots clés
Central bank digital currency, liquidity, financial stability

© 2023 Soraya Ben Souissi et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Could the Issuance of CBDC Reduce the Likelihood of Banking Panic?1

Publié en ligne: 24 mai 2023

Pages: 83 - 101

Reçu: 08 févr. 2022

Accepté: 13 juin 2022

DOI: https://doi.org/10.2478/jcbtp-2023-0015

Mots clésCentral bank digital currency, liquidity, financial stability

© 2023 Soraya Ben Souissi et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Could the Issuance of CBDC Reduce the Likelihood of Banking Panic?¹

Mots clés
Central bank digital currency, liquidity, financial stability