Ahnert, Toni; Hoffmann, Peter; Monnet, Cyril (May 2022). The digital economy, privacy, and CBDC (ECB Working Paper Series 2662).
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We study a model of financial intermediation, payment choice, and privacy in the digital economy. While digital payments enable merchants to sell goods online, they also reveal information to banks. By contrast, cash guarantees anonymity, but limits distribution to less efficient offline venues. In equilibrium, merchants trade off the efficiency gains from online distribution (with digital payments) and the informational rents from staying anonymous (with cash). The introduction of central bank digital currency (CBDC) raises welfare because it reduces the privacy concerns associated with online distribution. Payment tokens issued by digital platforms crowd out CBDC unless the latter facilitates data-sharing.
Item Type: |
Working Paper |
|---|---|
Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics |
UniBE Contributor: |
Monnet, Cyril |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
Series: |
ECB Working Paper Series |
Language: |
English |
Submitter: |
Julia Alexandra Schlosser |
Date Deposited: |
19 Dec 2022 14:10 |
Last Modified: |
19 Dec 2022 18:39 |
BORIS DOI: |
10.48350/176054 |
URI: |
https://boris.unibe.ch/id/eprint/176054 |
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