Today, the U.S. Office of Financial Research published a working paper, “Central Bank Digital Currency: Stability and Information” [archived PDF]. The working paper looks at how introducing a central bank digital currency (CBDC) would affect the banking system’s stability.
First, banks lower their maturity mismatch when depositors have access to CBDC, reducing their exposure to depositor runs. Second, the flow of funds into a CBDC provides policymakers with a new source of real-time information.
Read the working paper. [Archived PDF]