• Working Paper

    • CBDC and the Shadow of Bank Disintermediation: US Stock Market Insights on Threats and Remedies

      Joint work with Lars Beckmann, Jörn Debener and Andreas Pfingsten

      Abstract: Highly deposit-dependent banks might be strongly negatively affected by the introduction of a central bank digital currency (CBDC). Particularly a retail CBDC, focusing on the use by consumers, may constrain cheap funding and thus erode profits of banks (deposit channel). Our empirical study reveals that stock market reactions of US banks to speeches by US Federal Reserve (FED) executives indicating a CBDC introduction are indeed more negative the more these banks depend on deposits. However, as soon as protection against disintermediation is promised by the FED, e.g., via a non-interest bearing CBDC or a CBDC holding limit per person, we observe positive stock market reactions for highly deposit-dependent banks.

      Available at SSRN