![]() The bulk of cash is held for store of value purposes.Our analysis is motivated by three key empirical findings: Our simulations show that there is a wide range of cases in which, despite the partial disintermediation of banks, the introduction of a CBDC that serves as a superior public storage technology increases social welfare. For this purpose, we develop a model a la Diamond and Dybvig (1983) with public money and heterogeneous beliefs about bank stability. The aim of our new study (Muñoz and Soons 2023) is to evaluate how the introduction of a CBDC as a store of value affects bank intermediation, investments and welfare by altering consumers’ portfolio choice between public money and private money in a model that accounts for the empirical evidence on cash holdings. ![]() 2022) and the increasing demand for safe liquid assets as a store of value, there are good grounds for this concern. Given the perceived degree of substitutability between CBDC and bank deposits (Burlon et al. 2022, Bindseil and Panetta 2020, and Jamet et al. However, there are concerns that if also widely used as a store of value, CBDCs may disintermediate banks (e.g. The ultimate goal of a CBDC is to ensure that individuals operating in an increasingly digitalised economy continue to have access to public money as a means of payment. In response to this shift, central banks have started to investigate the benefits and implications of issuing central bank digital currency (CBDC). In recent years, the use of digital payment methods for transactions has been increasing at the expense of cash, a pattern that has become more pronounced since the outbreak of the Covid-19 crisis (e.g.
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