{"title":"Could CBDCs Lead to Cash Extinction? Insights from a “Merchant-Customer” Model","authors":"Rodolfo Maino, Marco Pani","doi":"10.1007/s11294-024-09888-z","DOIUrl":null,"url":null,"abstract":"<p>Could the introduction of central bank digital currencies lead to the disappearance of physical cash from the payments system? This extinction would be fraught with several insidious risks, as most of the benefits of the other payments instruments hinge on the continued possibility to use cash for retail transactions. This paper investigates how the use of different payments instruments may evolve over time in a two-sided market where different types of agents can choose which instrument(s) they would use. It shows that while more instruments can continue to be used indefinitely in equilibrium, there are also cases where one instrument becomes extinct and this new equilibrium can be stable, hence, irreversible. The paper also shows that very different outcomes can be reached from very similar initial conditions, and that a minor perturbation, such as the introduction, even on a small scale, of a new instrument can lead to the eventual extinction of one instrument. These results call for caution with the introduction of digital currencies and, more generally, with the digitalization of the financial system.</p>","PeriodicalId":45656,"journal":{"name":"International Advances in Economic Research","volume":"201 1","pages":""},"PeriodicalIF":1.1000,"publicationDate":"2024-02-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Advances in Economic Research","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s11294-024-09888-z","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Could the introduction of central bank digital currencies lead to the disappearance of physical cash from the payments system? This extinction would be fraught with several insidious risks, as most of the benefits of the other payments instruments hinge on the continued possibility to use cash for retail transactions. This paper investigates how the use of different payments instruments may evolve over time in a two-sided market where different types of agents can choose which instrument(s) they would use. It shows that while more instruments can continue to be used indefinitely in equilibrium, there are also cases where one instrument becomes extinct and this new equilibrium can be stable, hence, irreversible. The paper also shows that very different outcomes can be reached from very similar initial conditions, and that a minor perturbation, such as the introduction, even on a small scale, of a new instrument can lead to the eventual extinction of one instrument. These results call for caution with the introduction of digital currencies and, more generally, with the digitalization of the financial system.
期刊介绍：
International Advances in Economic Research (IAER) was established to promote the dissemination of economic and financial research within the international community. Founded in 1995 by the International Atlantic Economic Society, a need was identified to provide the latest research on today''s economic policies and tomorrow''s economic and financial conditions. Economists can no longer be concerned with professional developments only in their home country. Research by scholars in one country can easily have implications for other countries, yet often vital results are not shared. Economic restructuring in a shrinking world demands close analysis and careful interpretation. In IAER, authors from around the globe look at these issues, coming together in the cross-fertilization of multinational ideas. The journal provides economists, financial specialists, and scholars in related disciplines with much-needed opportunities to share their insights with worldwide colleagues. Policy-oriented, empirical, and theoretical research papers in all economic and financial areas are welcome, without regard to methodological preferences or school of thought. All manuscripts are submitted to a double-blind, peer review process.
In addition to formal publication of full-length articles, IAER provides an opportunity for less formal communication through its Research Notes section. A small point may not be worthy of a full-length, formal paper but is important enough to warrant dissemination to other researchers. Research in progress may be of interest to other scholars in the field. A research approach ending in negative results needs to be shared to save others similar pitfalls. Research Notes has been established to facilitate this form of communication. The section provides a means by which short manuscripts of less than 200 words can quickly appear in IAER. The review process for these shorter manu scripts is usually completed within 30 days.
Officially cited as: Int Adv Econ Res
求助内容：
应助结果提醒方式：
京公网安备 11010802042870号
