Could the Issuance of CBDC Reduce the Likelihood of Banking Panic?1

Soraya Ben Souissi; Mahmoud Sami Nabi

doi:10.2478/jcbtp-2023-0015

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Could the Issuance of CBDC Reduce the Likelihood of Banking Panic?1

Journal of Central Banking Theory and Practice

Volume 12 (2023): Issue 2 (May 2023)

By: Soraya Ben Souissi and Mahmoud Sami Nabi

Open Access

|May 2023

Abstract

This paper delves into the relationship between the issuance of Central Bank Digital Currencies (CBDC) and the likelihood of banking panic. The issuance of CBDC acts as a disturbing shock that incentivizes depositors to withdraw all/part of their deposits from the commercial banks, to swap it for CBDC which are offered by the central bank. We determine a variety of tools that central banks can use in order for the issuance of CBDC to act as a stabilizing factor of the banking system (by reducing the likelihood of banking panic).

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Articles in this issue

DOI: https://doi.org/10.2478/jcbtp-2023-0015 | Journal eISSN: 2336-9205

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Language: English

Page range: 83 - 101

Submitted on: Feb 8, 2022

Accepted on: Jun 13, 2022

Published on: May 24, 2023

Published by: Central Bank of Montenegro

In partnership with: Paradigm Publishing Services

Publication frequency: 3 issues per year

Keywords:

Central bank digital currency,

liquidity,

financial stability

Related subjects:

Business and economics,

Business management,

Business management, other

© 2023 Soraya Ben Souissi, Mahmoud Sami Nabi, published by Central Bank of Montenegro
This work is licensed under the Creative Commons Attribution 4.0 License.

Volume 12 (2023): Issue 2 (May 2023)