ABSTRACT
CBDC refers to a digital form of central bank-issued money. The criterion of CBDC includes but is not limited to the following: first, availability, whether they are for the general public or only for financial institutions; second, whether they are based on account or token; and third, whether they are interest-bearing. The issuance of CBDC will affect monetary policy and financial stability depends mainly on their design. During the past few years, CBDC plans in major countries have gradually converged into “cash replacement, based on 100% reserves, follow two-tier operating model, token-based, and non-interest-bearing.” Compared with wholesale CBDC, retail CBDC’s impacts should be further studied. In particular, retail CBDC may have a crowd-out effect on bank deposits and affect commercial banks’ funding, lending, and financial stability. Should a central bank choose to develop retail or wholesale CBDC? It is unlikely to have a unified answer to this question. But the good thing is that CBDC projects with different design choices can corroborate and complement each other. As representative wholesale CBDC projects gradually finish their experiments, retail CBDC will become the research focus because of the complex monetary and financial issues.
