Economic Strategy

Economic Strategy

Analysis of the impact of CBDC release in reducing the risk of the banking system; Suggestions for the general monetary and banking policies of the country

Document Type : Original Article

Authors
Hassan Sobhani 1
Ali Shahidi 2
1 Professor, Department of Islamic, Monetary and Financial Economics, Faculty of Economics, University of Tehran, Tehran, Iran
2 PhD student, Faculty of Economics, University of Tehran, Tehran, Iran.
10.22034/es.2025.468935.1786
Abstract
In the current banking system, the risk of both sides of the balance sheet of the banking system is not the same due to deposits with shorter maturity compared to the facilities  by the banking system . The need of economic actors to receive longer-term facilities compared to the time of their long-term deposits, along with the existence of current deposits and the payment of facilities from this place by the banking system, has led to the creation of liquidity risk in the banking system. Also, due to the possibility of preventing the bankruptcy of the bank through the postponement of the defaulted facilities, the risk of paying the facilities to the related parties of the bank and increasing the risk of non-return of the facilities increases. In this research, within the framework of game theory, it is shown that through the replacement of Central Bank digital money (CBDC) instead of bank demand deposits, which is actually a structural approach to solving the problem of external effects of the banking system, the liquidity risk of the banking system tends to zero. he does. Also, with the substitution of digital money instead of the demand deposits, the credit risk of banks is reduced due to the selection of better borrowers for obtaining facilities. n fact, based on the model result, after the substitution of digital currency (in both developed and less developed countries), banks choose safe behavior, the central bank chooses no protection behavior, and depositors choose trust behavior.
Keywords
Central bank digital currency
Demand deposits
Game theory
Liquidity risk
Facility default

Subjects

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  • Receive Date 25 August 2024
  • Revise Date 15 April 2025
  • Accept Date 25 April 2025