Template-Type: ReDIF-Paper 1.0
Author-Name: Rhys Bidder
Author-X-Name-First: Rhys
Author-X-Name-Last: Bidder
Author-Name: Timothy Jackson
Author-X-Name-First: Timothy
Author-X-Name-Last: Jackson
Author-Name: Matthias Rottner
Author-X-Name-First: Matthias
Author-X-Name-Last: Rottner
Title: CBDC and banks: disintermediating fast and slow
Abstract: We examine the impact of a retail central bank digital currency, combining survey evidence from German households with a macroeconomic model featuring endogenous systemic bank runs. The survey reveals non-trivial demand for retail CBDC as a substitute for bank deposits in normal times ("slow disintermediation") and increased withdrawal risks during financial distress ("fast disintermediation"). Informed by the survey, the model indicates that introducing a retail CBDC might reduce financial stability because CBDC offers storage-at-scale - making it attractive to run to. We estimate an optimal holding limit which chokes off fast disintermediation and enhances financial stability by shrinking a fragile banking system.
Creation-Date: 2025-07
File-URL: https://www.bis.org/publ/work1280.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1280.htm
File-Format: text/html
Number: 1280
Keywords: Central bank digital currencies, financial crises, disintermediation, bank runs, banking system, money
Classification-JEL: E42, E44, E51, E52, G21
Handle: RePEc:bis:biswps:1280