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
This paper develops a tractable general equilibrium model to study the monetary policy and financial stability implications of the introduction of a retail central bank digital currency (retail CBDC). I construct a model that contains a heterogenous banking sector exhibiting market power, endogenous default, incomplete markets, and credit and deposit markets. My model replicates multiple channels through which monetary policy operate: the deposits channel, the bank lending and the risk-taking channel. I show that the transmission of monetary policy is dampened and household welfare loss arises. The introduction of a a retail CBDC is shown to improve the transmission of monetary policy. Furthermore, a retail CBDC is shown to increase competition in the monopolistic banking sector, thereby leading to a crowding in of savings via bank deposits, expanding bank intermediation, and thereby increasing output. However, a tradeoff naturally arises in the form of an increase in financial instability.
