Edona Reshidi is a Senior Economist in the Banking and Payments Department (BAP) - CBDC and FinTech Policy & Research. She is a microeconomist with research interests in payment platforms, vertical and search markets. Edona obtained her PhD in Economics from University of Vienna.
We study the competition between a welfare-maximizing public payment platform (e.g., CBDC or fast payment system) and a profit-maximizing private platform in a two-sided market, deriving optimal public pricing and showing how network effects, fragmentation, and policy mandates like zero fees or cost recovery shape welfare, usage, and fee incidence.
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.
Is obscuring prices always bad for consumers? The answer depends on the market structure and on the negotiating power between manufacturers and retailers.
We discuss the competition and innovation arguments for issuing a central bank digital currency (CBDC). A CBDC could be an effective competition policy tool for payments. A CBDC could also support the vibrancy of the digital economy. It could help solve market failures and foster competition and innovation in new digital payments markets.
