This paper analyzes the potential effect of a European Central Bank Digital Currency (CBDC) on banks' profitability. We … introduce a shock on the amount of deposits that would be replaced by the CBDC. Our results show that, for a large take-up of … CBDC, there might be substantial challenges for the profitability of banks, especially for small banks, that mostly rely on …

hold cash. In our model, the introduction of a central bank digital currency (CBDC) as a store of value that is superior to … cash leads to bank disintermediation as some depositors opt for switching to CBDC based on their beliefs. While CBDC … optimistic about bank stability and banks re-balance their portfolio accordingly. The appropriate calibration of CBDC design …

We estimate a dynamic banking model to quantify the impact of a central bank digital currency (CBDC) on the banking … system. Our counterfactuals show that a one-dollar introduction of CBDC replaces bank deposits by around 80 cents on the … CBDC bears interest or is intermediated through banks, it captures a greater deposit market share, amplifying the impact on …

Digitalization and Blockchain have fundamentally transformed the structure of the monetary system. The first wave of … dollarization. Meanwhile, the discussion around the introduction of central bank digital currencies (CBDC) as a possible response …