June 2021 issue contents
Broadening Narrow Money: Monetary Policy with a Central Bank Digital Currency

Jack Meaninga, Ben Dysonb, James Barkerand Emily Claytona


This paper discusses central bank digital currency (CBDC) and its potential impact on the monetary transmission mechanism. We first offer a general definition of CBDC which should make the concept accessible to a wide range of economists and policy practitioners.We then investigate how CBDC could affect the various stages of transmission, from markets for central bank money to the real economy. We conclude that monetary policy would be able to operate much as it does now, by varying the price or quantity of central bank money. Transmission may even be strengthened for a given change in policy instruments.

JEL Code: E42, E52, E58.

Full article (PDF, 42 pages, 896 kb)

a  Bank of England
b  Bank for International Settlements Innovation Hub