How does a central bank digital currency (CBDC) affect bank deposit market competition? This paper shows that cash-like retail e-CNY enhanced the deposit market competition by reshaping the perceived riskiness differential between large and small banks. I document the “convergence” of large...

Under the Single Supervisory Mechanism (SSM), introduced in 2014, systemically important euro area banks with combined assets of about 21,000 billion euros are directly supervised by the ECB. We examine from a static and a dynamic perspective how this fundamental shift to unified supervision...

Aim: The aim of this paper is to describe the construction of a new system for digital currency governed by the central bank, Central Bank Digital Currency (CBDC). Although the system uses cryptography, it is a new alternative for crypto currency like the Bitcoin. Today there is a global...

Central banks around the world are exploring and in some cases even piloting Central Bank Digital Currencies (CBDCs). CBDCs promise to realize a broad range of new capabilities, including direct government disbursements to citizens, frictionless consumer payment and money-transfer systems, and a...

In this study, we provide a systemic perspective on central bank digital currencies (CBDC). We separate existing proposals for CBDCs into the perspective of new payment objects, made available by central banks to a broader public, and new payment systems, operated by central banks. From a...

The decision to introduce a central bank digital currency (CBDC) is part of the new challenges that central banks are facing as technology keeps moving. The e-Peso pilot plan, implemented between 2017 and 2018, could provide some key findings for central banks. In this sense, we can learn seven...

This paper investigates the costs and benefits of liquidity regulation. We find that liquidity tools are beneficial but cannot completely remove the need for Lender of Last Resort (LOLR) interventions by the central bank. Full compliance with current Liquidity Coverage Ratio (LCR) and Net Stable...

New lessons, challenges, and debates have emerged from the subprime crisis in the United States. While the macroeconomic orientation is not new and has always been among the classic toolkits of central banks for ensuring financial stability, the current explicit articulation and specification of...

This paper explores the reliability of using prices of credit default swap contracts (CDS) as indicators of default probabilities during the 2007/2008 financial crisis. We use data from the Canadian financial system to show that these publicly available risk measures, while indicative of initial...

We develop a model in which financial intermediaries hold liquidity to protect themselves from shocks. Depending on parameter values, banks may choose to hold too much or too little liquidity on aggregate compared with the socially optimal amount. The model endogenously generates a situation of...