Template-Type: ReDIF-Paper 1.0
Author-Name: Boris Hofmann
Author-X-Name-First: Boris
Author-X-Name-Last: Hofmann
Author-Name: Xiaorui Tang
Author-X-Name-First: Xiaorui
Author-X-Name-Last: Tang
Author-Name: Feng Zhu
Author-X-Name-First: Feng
Author-X-Name-Last: Zhu
Title: Central bank and media sentiment on central bank digital currency: an international perspective
Abstract: This paper examines the sentiments of central banks and the media regarding central bank digital currencies across 15 major global economies. Leveraging large language models, we develop jurisdiction-level central bank digital currency sentiment indices derived from central bank publications and news articles on a daily basis. Our findings reveal significant divergences between central bank and media sentiments, with notable variations over time and across jurisdictions. Analyzing the interplay between these sentiments, we observe that central bank sentiment tends to exert a stronger influence on media sentiment than the reverse. Additionally, we identify substantial cross-border sentiment spillovers, where sentiment in leading economies shapes sentiment in other regions. Through an event study approach, we demonstrate that cryptocurrency and equity markets primarily respond to shifts in central bank sentiments. Specifically, more positive central bank sentiments on central bank digital currency are associated with negative impacts on cryptocurrency market returns and the stock performance of banking and payment-related firms.
Creation-Date: 2025-07
File-URL: https://www.bis.org/publ/work1279.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1279.htm
File-Format: text/html
Number: 1279
Keywords: Central bank digital currency (CBDC), central bank communication, media sentiment, large language model (LLM), financial market
Classification-JEL: E58, G12, G18
Handle: RePEc:bis:biswps:1279