Work

Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis

Year: 2022

Type: article

Abstract: This paper discusses how a Federal Reserve issued retail central bank digital currency (CBDC) could affect U.S. monetary policy implementation. Using a stylized balance sheet analysis, we analyze the effect a retail CBDC could have on the balance sheets of the Federal Reserve, commercial banks, and U.S. households. Then we consider how these balance sheet changes could affect monetary policy implementation for the Federal Reserve. We illustrate that the potential effects on monetary policy implementation from a retail CBDC are highly dependent on the initial conditions of the Federal Reserve’s balance sheet. Moreover, the analysis demonstrates how the Federal Reserve may use its existing tools to manage the effects of a retail CBDC on monetary policy implementation.

Source: Finance and Economics Discussion Series

DOI: 10.17016/feds.2022.032

Authors: Matthew Malloy, Francis Martinez, Mary-Frances Styczynski, Alex Thorp

Institutions: Federal Reserve, Federal Reserve Board of Governors

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: diamond

OpenAlex ID: W4281679677

FWCI: 6.979

Cites: 9

Cited by: 29

Related to: 10