Many central banks are considering launching digital currencies. Far from a simple technological innovation, central bank digital currencies (CBDC) might persistently alter the size and composition of central bank balance sheets.
Martina Fraschini, Luciano Somoza and
Tammaro Terracciano analyse the equilibrium effects of the introduction of a CBDC and its interaction with current monetary policies. They show how and when issuing a CBDC might render expansionary policies quasi-permanent.
Read their insightful article HERE.
