<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

Published Online: May 24, 2023

Page range: 83 - 101

Received: Feb 08, 2022

Accepted: Jun 13, 2022

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

Keywords
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

Published Online: May 24, 2023

Page range: 83 - 101

Received: Feb 08, 2022

Accepted: Jun 13, 2022

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

KeywordsCentral 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

Keywords
Central bank digital currency, liquidity, financial stability