We analyze policy in a two-tiered monetary system. Noncompetitive banks issue deposits while the central bank issues … reserves and a retail CBDC. Monies differ with respect to operating costs and liquidity. We map the framework into a baseline … business cycle model with “pseudo wedges” and derive optimal policy rules: Spreads satisfy modified Friedman rules and deposits …

We analyze policy in a two-tiered monetary system. Noncompetitive banks issue deposits while the central bank issues … reserves and a retail CBDC. Monies differ with respect to operating costs and liquidity. We map the framework into a baseline … business cycle model with "pseudo wedges" and derive optimal policy rules: Spreads satisfy modified Friedman rules and deposits …

modified Friedman (1969) rules the optimal monetary policy. Optimal interest rates on reserves and CBDC differ. A calibration …

We analyze policy in a two-tiered monetary system. Noncompetitive banks issue deposits while the central bank issues … reserves and a retail CBDC. Monies differ with respect to operating costs and liquidity. We map the framework into a baseline … business cycle model with "pseudo wedges" and derive optimal policy rules: Spreads satisfy modified Friedman rules and deposits …

We analyze policy in a two-tiered monetary system. Noncompetitive banks issue deposits while the central bank issues … reserves and a retail CBDC. Monies differ with respect to operating costs and liquidity. We map the framework into a baseline … business cycle model with “pseudo wedges” and derive optimal policy rules: Spreads satisfy modified Friedman rules and deposits …

We analyze policy in a two-tiered monetary system. Noncompetitive banks issue deposits while the central bank issues … reserves and a retail CBDC. Monies differ with respect to operating costs and liquidity. We map the framework into a baseline … business cycle model with "pseudo wedges" and derive optimal policy rules: Spreads satisfy modified Friedman rules and deposits …

creates money by lending to banks, and banks on-lend the proceeds to the economy. The proposed model would allow for deposits …

excess reserves, has forced policymakers to design a new operational framework for monetary policy implementation. We provide …