Prof. Dirk Niepelt will present his paper “Monetary Policy with Reserves and CBDC: Optimality, Equivalence, and Politics”, where he analyzes policy in a two-tiered monetary system.
Model implies, that noncompetitive banks issue deposits while the central bank issues reserves and a retail CBDC. Monies differ with respect to operating costs and liquidity. This framework is mapped into a baseline business cycle model with “pseudo wedges” and optimal policy rules are derived: Spreads satisfy modified Friedman rules and deposits must be taxed or subsidized.
The author generalizes the Brunnermeier and Niepelt (2019) result on the macro irrelevance of CBDC but shows that a deposit based payment system requires higher taxes. The model implies annual implicit subsidies to U.S. banks of up to 0:8 percent of GDP during the period 1999-2017.
Date & Time: 17:00-18:00, March 19th 2021.
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