Central bank digital currencies: The case of universal central bank reserves

Abstract: We analyse several motivations for the introduction of a widely accessible central bank digital currency (CBDC). If a central bank decided to offer a CBDC, its design would have to consider different areas of central bank activity, taking into account multiple policy principles, objectives and constraints. In addition, the introduction of a CBDC on a large scale may have a non-trivial impact on the architecture of the financial system. From this perspective, some common arguments in favor of CBDC may seem simplistic and the field of feasible options may be narrower than often believed.

We reconsider Tobin’s idea to establish a system of universal access to central bank reserves, and clarify its feasibility and advantages as an account-based CBDC.

JEL Classification: E41, E42, E43, E51, E52, E58

Keywords: Central bank digital currency, universal central bank reserves, deposited currency accounts, cash, central bank, central bank policies, monetary policy, financial stability, payment systems, deposit insurance, bank deposits, inside money, collateral, virtual currencies