Most central banks in advanced economies consider issuing central bank digital currencies (CBDCs) to address the declining use of cash and to position themselves against increased competition from Big Tech companies, cryptocurrencies, and stablecoins. One crucial design dimension of a CBDC...

In the late eighteenth and early nineteenth century, Scotland had a stable financial system. Its stability arose from the pressure that private banks, which had the right to issue bank notes, placed on each other to behave prudently. Unlike in England, the Scottish banking system had no central...

Central Bank Digital Currency (CBDC) has become a major policy interest among global central banks. However, its introduction faces many challenges including those that are legal, technological and political in nature. In this paper, we summarize those challenges and add a few more that have not...

This paper studies the implications of tax evasion for the optimal design of central bank digital currency (CBDC). I build a general equilibrium framework to explicitly allow tax evasion by agents and tax audits by a government. I find that as long as CBDC offers less anonymity than cash,...

This chapter utilizes the social fabric matrix approach (SFM-A) to provide a detailed description of the Federal Reserve's (Fed's) daily operations and the recent financial crisis. The SFM of the Fed's operations presents the primary components- major norms, institutions, technologies- relevant...

This paper discusses the role of economic and monetary analysis in the monetary policy strategy of the European Central Bank (ECB). Both areas of analysis have evolved since the 2003 strategy review. Economic analysis has assigned an increasingly relevant role to the Eurosystem and ECB staff...

This paper examines key considerations around central bank digital currency (CBDC) for use by the general public, based on a comprehensive review of recent research, central bank experiments, and ongoing discussions among stakeholders. It looks at the reasons why central banks are exploring...

This working paper looks at excess reserves in historical context and analyzes whether they constitute a monetary policy problem for the Federal Reserve System (the "Fed") or a potentially inflationary problem for the rest of us. Generally, this analysis shows that both absolute and relative...

Many central banks are currently investigating Central Bank Digital Currency (CBDC) and possible designs. A recent survey conducted by the European Central Bank has found that both citizens and professionals consider privacy the most important feature of a CBDC. We show how a central bank could...

With the emergence of Bitcoin and recently proposed stablecoins from BigTechs, such as Diem (formerly Libra), central banks face growing competition from private actors offering their own digital alternative to physical cash. We do not address the normative question whether a central bank should...