OxTalks will soon move to the new Halo platform and will become 'Oxford Events.' There will be a need for an OxTalks freeze. This was previously planned for Friday 14th November – a new date will be shared as soon as it is available (full details will be available on the Staff Gateway).
In the meantime, the OxTalks site will remain active and events will continue to be published.
If staff have any questions about the Oxford Events launch, please contact halo@digital.ox.ac.uk
When a central bank introduces a central bank digital currency, it may lead to an erosion of deposits as the stable funding base of banks and result in challenges regarding the asset side of the central bank. We study the resulting economy and trade-offs in a stylized nominal version of the Diamond-Dybvig (1983) model. The central bank is now involved in maturity transformation, if it so chooses. We posit that the central bank pursues three objectives: price stability, economic efficiency and financial stability. We demonstrate that a CBDC Trilemma arises: out of these three objectives, the central bank can achieve at most two. In particular, a commitment to price stability can cause a run on the central bank. Implementation of the socially optimal allocation requires a commitment to inflation. Keywords: CBDC, currency crises, monetary policy, bank runs, financial intermediation, central bank digital currency, inflation targeting
