Cover IMF Working Papers
Cross-Border Central Bank Digital Currencies, Bank Runs and Capital Flows Volatility
Author: Ms. Adina Popescu
Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 083
Language:
English
Publication Date:
06 May 2022
DOI:
https://doi.org/10.5089/9798400209185.001
ISBN:
9798400209185
ISSN:
1018-5941
Pages:
43
Keywords:
Central bank digital currency; CBDC; capital flows; open-economy; financial stability; deposit contract; capital flows volatility; cross-border CBDCs; model of bank runs; CBDC deposit; CBDC issuer; Central Bank digital currencies; Commercial banks; Foreign banks; Bank deposits; Capital account; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Central banks around the world are increasingly exploring central bank digital currencies (CBDCs). This paper investigates the possible impacts of cross-border CBDCs on capital flows and financial stability in a simple open economy extension of a classical model of bank runs, augmented with the presence of a credible foreign central bank, which issues an account-based interest bearing CBDC available to nonresidents. The paper finds that the presence of a foreign CBDC which acts as an international safe asset may increase the risk of financial disintermediation in the domestic banking sector, which can be accompanied by higher and more volatile capital flows.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund