Event start date: 19.03.2021 17:00

On 19 March 2021, the National Bank of Ukraine hosted an open research seminar, during which Prof. Dirk Niepelt presented the research  "Monetary Policy with Reserves and CBDC: Optimality, Equivalence, and Politics", where he analyzes policy in a two-tiered monetary system. Model implies, that noncompetitive banks issue deposits while the central bank issues reserves and a retail CBDC. Monies differ with respect to operating costs and liquidity. This framework is mapped into a baseline business cycle model with "pseudo wedges" and optimal policy rules are derived: Spreads satisfy modified Friedman rules and deposits must be taxed or subsidized. The author generalizes the Brunnermeier and Niepelt (2019) result on the macro irrelevance of CBDC but shows that a deposit based payment system requires higher taxes. The model implies annual implicit subsidies to U.S. banks of up to 0:8 percent of GDP during the period 1999-2017.

Materials from the seminar are available via links below.