Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025)

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Research on the Crowding-Out Effect of Central Bank Digital Currency Issuance on Commercial Bank Deposits - A General Equilibrium Based Perspective

Authors
Zhen Sun1, Lanbiao Liu1, *
1School of Finance, Nankai University, Tianjin, China
*Corresponding author. Email: liulanbiao@nankai.edu.cn
Corresponding Author
Lanbiao Liu
Available Online 7 June 2025.
DOI
10.2991/978-94-6463-752-6_20How to use a DOI?
Keywords
central bank digital currency; commercial banks; crowding-out effects; general equilibrium
Abstract

Since the rise of cryptocurrencies such as Bitcoin in the early 2010s, the research, piloting and implementation of central bank digital currencies (CBDCs) are accelerating to breakthroughs around the world. This paper constructs a multisectoral general equilibrium model to study the crowding-out effect of the issuance of CBDC on banking sector deposits and its mechanism under the scenario of CBDC-cash equivalence, and clarifies the optimal rules and parameter dependence of deposits and reserves in economies containing CBDC by solving the general equilibrium conditions and setting up the optimal policy rules. The impact of this effect on the dynamic optimization of policy is further analyzed. The conclusions show that increasing the reserve rate and government deposit subsidy will improve the deposit liquidity premium and stabilize the deposit interest rate, and that the government and the central bank can choose with discretion between issuing base money (cash or CBDC) or relying on bank deposits without lending to banks.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025)
Series
Advances in Economics, Business and Management Research
Publication Date
7 June 2025
ISBN
978-94-6463-752-6
ISSN
2352-5428
DOI
10.2991/978-94-6463-752-6_20How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Zhen Sun
AU  - Lanbiao Liu
PY  - 2025
DA  - 2025/06/07
TI  - Research on the Crowding-Out Effect of Central Bank Digital Currency Issuance on Commercial Bank Deposits - A General Equilibrium Based Perspective
BT  - Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025)
PB  - Atlantis Press
SP  - 186
EP  - 196
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-752-6_20
DO  - 10.2991/978-94-6463-752-6_20
ID  - Sun2025
ER  -