Study Of The Macroeconomic Effect Of Central Bank Digital Currency

With the rapid development of fintech,private digital currencies represented by bitcoin and Ethereum emerge one after another.The characteristics of decentralized and complete anonymity of private digital currencies bring many risks and challenges to the security and stability of the financial system.Meanwhile,the COVID-19 epidemic has aggravated the public’s concern about cash security and hygiene issues.The demand for non-contact payment methods under the social isolation policy has been significantly improved.In this context,central banks around the world have begun to change their attitude towards the Central Bank Digital Currency(CBDC)and have accelerated the development and testing of it.The People’s Bank of China is at the forefront in the research and development of CBDC.In 2014,the PBC established a research group on CBDC.To date,China has carried out pilot testing of e-CNY in various regions and scenes.But will the issuance and circulation of CBDC cause violent fluctuations in the macro economy and have a negative impact? What kind of monetary policy rules should China choose under the condition of CBDC? These problems still have room for further deepening and expansion.In view of this,this dissertation explores the macroeconomic effects of CBDC at different stages of development and under different monetary policy rules,which is of great significance for the PBC to improve the monetary policy framework when CBDC is popularized in the future.Based on Barrdear & Kumhof(2021)and Yao Qian(2019),this dissertation attempts to build four-sector new Keynesian dynamic stochastic general equilibrium model(DSGE model)that introduces CBDC.The results show that: Firstly,In the early stage of the development of CBDC,the external shocks will have an adverse impact on the economy in the initial stage,and then maintain long-term positive growth;In the middle and later stage of the development of CBDC,the impulse response of macroeconomic variables is relatively close,and the impact of external shocks in these two stages on macro economy continues to be positive.But the middle stage is slightly better than the later stage;Secondly,the impulse response of CBDC is quite different under the price rule and quantity rule.The impulse response fluctuation of CBDC under the price rule is less than that of the quantity rule,and its macroeconomic effects is more significant than that of quantity rule.Therefore,the price rule can effectively smooth out the economic cycle and slow down economic fluctuations.When CBDC is popularized,China’s monetary authorities should appropriately increase the regulation frequency and space of the price rule and give full play to the function of monetary policy in regulating and controlling macro economy.