E58 - Central Banks and Their Policies
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Public and Private Money Creation for Distributed Ledgers: Stablecoins, Tokenized Deposits, or Central Bank Digital Currencies?
This paper explores the implications of introducing digital public and private monies (e.g. tokenized central bank digital currency [CBDC] or tokenized deposits) for stablecoins and illicit crypto transactions. -
Monetary Policy Governance: Bank of Canada Practices to Support Policy Effectiveness
We examine different monetary policy governance structures and discuss the important roles of non-legislated processes and practices. We also provide an update on monetary policy governance at the Bank of Canada and how it has evolved over time. -
Ecosystem Models for a Central Bank Digital Currency: Analysis Framework and Potential Models
This note analyzes different economic models of a central bank digital currency (CBDC) ecosystem where the central bank chooses different levels of market involvement and usage of policy levers. The analysis suggests that there are trade-offs between the costs to the central bank and its ability to achieve policy goals like universal access. -
Central Bank Digital Currency and Transmission of Monetary Policy
How does the transmission of monetary policy change when a central bank digital currency (CBDC) is introduced in the economy? Does CBDC design matter? We study these questions in a general equilibrium model with nominal rigidities, liquidity frictions, and a banking sector where commercial banks face a leverage constraint. -
The Role of Public Money in the Digital Age
A well-functioning monetary system is characterized by public and private forms of money that exchange at par as value flows freely between them. A relevant retail public money—whether in the form of cash, a central bank digital currency or both—is a necessary component of such a monetary system. -
Central Bank Liquidity Policy in Modern Times
Across several dimensions of lender of last resort policy, I highlight broad changes that have occurred since the 2008–09 global financial crisis and discuss some of the key challenges, choices and considerations facing the designers of central bank liquidity tools today. -
Demand for Canadian Banknotes from International Travel: Indirect Evidence from the COVID-19 Pandemic
This study uses the COVID-19 travel restrictions to estimate foreign demand for Canadian banknotes. It reveals that international visitors accounted for about 10% of all $100 CAD notes in circulation pre-pandemic, with each visitor carrying an average of $165 in hundred-dollar bills. -
Assessing the Impact of the Bank of Canada’s Government Bond Purchases
In March 2020, the Bank of Canada implemented the Government of Canada Bond Purchase Program, eventually purchasing approximately $340 billion of government bonds. In this paper, we analyze the impact of this program on financial market prices and yields as well as on GDP and inflation. -
Assessing the US and Canadian neutral rates: 2024 update
We assess both the US and Canadian nominal neutral rates to be in the range of 2.25% to 3.25%, somewhat higher than the range of 2.0% to 3.0% in 2023. The assessed range is back to the level it was at in April 2019.