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The Problem of Parity in CBDC Implementation

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Presentation on theme: "The Problem of Parity in CBDC Implementation"— Presentation transcript:

1 The Problem of Parity in CBDC Implementation
FinTech, RegTech and digital currencies: Consequences for regulation and central banking London 2019 Ole Bjerg, Copenhagen Business School

2

3 Store of value Parity Unit of account Medium of exchange

4 Commercial banks and central bank
Store of value Exchange rate parity CBDC and bank money are convertible at 1:1 Parity Digital cash scenario Unit of account Medium of exchange

5 Commercial banks and central bank
Store of value Exchange rate parity CBDC and bank money are convertible at 1:1 Creditors and Treasury Parity Settlement parity CBDC and bank money settle taxes and debt at nominal price  Digital cash scenario Unit of account Medium of exchange

6 Commercial banks and central bank
Store of value Exchange rate parity CBDC and bank money are convertible at 1:1 Creditors and Treasury Market and money users Parity Settlement parity CBDC and bank money settle taxes and debt at nominal price  Purchasing power parity CBDC and bank money  buy assets, goods and services at the same price. Digital cash scenario Unit of account Medium of exchange

7 Sovereign money scenario
Commercial banks Store of value Exchange rate parity ? Creditors and Treasury Market and money users Parity Settlement parity CBDC and bank money settle taxes and debt at nominal price  Purchasing power parity CBDC and bank money  buy assets, goods and services at the same price. Unit of account Medium of exchange Sovereign money scenario

8 Sovereign money scenario
Commercial banks Store of value Exchange rate parity ? Creditors Market and money users Parity Settlement     parity ? Purchasing power parity CBDC and bank money  buy assets, goods and services at the same price. Unit of account Medium of exchange Sovereign money scenario

9 Sovereign money scenario
Commercial banks Store of value Exchange rate parity ? Creditors Market and money users ? Settlement     parity ?      Purchasing     power parity ? Unit of account Medium of exchange Sovereign money scenario See: Bjerg, Ole: Breaking the Gilt Standard. CBS Working Paper, August 2018

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