Who Should Make Kroner?: A Review of Danmarks Nationalbank's Analysis of CBDC

Ole Bjerg, Rasmus Hougaard Nielsen

Research output: Working paperResearch

Abstract

This paper is a review of Danmarks Nationalbank's recent analysis of the prospects of implementing a Central Bank Digital Currency (CBDC) in Denmark. We concur with Nationalbanken's conclusion that CBDC does not add efficiency or further functionality to existing payment solutions. We argue, however, that their analysis fails to take into account the potentials for increased financial stability given the fact that CBDC carries no credit risk. We also find that Nationalbanken's dismissal of CBDC on the grounds that it does not provide new monetary policy tools, since interest rates are bound by the fixed exchange rate regime, fails to consider the value of CBDC in the event of a future crisis. Finally, we argue that the Nationalbanken's views may reflect a primary concern with the preservation of the existing banking sector in its current form over and above the needs of the general public.
This paper is a review of Danmarks Nationalbank's recent analysis of the prospects of implementing a Central Bank Digital Currency (CBDC) in Denmark. We concur with Nationalbanken's conclusion that CBDC does not add efficiency or further functionality to existing payment solutions. We argue, however, that their analysis fails to take into account the potentials for increased financial stability given the fact that CBDC carries no credit risk. We also find that Nationalbanken's dismissal of CBDC on the grounds that it does not provide new monetary policy tools, since interest rates are bound by the fixed exchange rate regime, fails to consider the value of CBDC in the event of a future crisis. Finally, we argue that the Nationalbanken's views may reflect a primary concern with the preservation of the existing banking sector in its current form over and above the needs of the general public.
LanguageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School, CBS
Number of pages27
StatePublished - 2018
SeriesWorking paper
NumberFebruary 2018

Cite this

Bjerg, O., & Hougaard Nielsen, R. (2018). Who Should Make Kroner? A Review of Danmarks Nationalbank's Analysis of CBDC. Frederiksberg: Copenhagen Business School, CBS. Working paper, No. February 2018
Bjerg, Ole ; Hougaard Nielsen, Rasmus. / Who Should Make Kroner? A Review of Danmarks Nationalbank's Analysis of CBDC. Frederiksberg : Copenhagen Business School, CBS, 2018. (Working paper; No. February 2018).
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Bjerg, O & Hougaard Nielsen, R 2018 'Who Should Make Kroner? A Review of Danmarks Nationalbank's Analysis of CBDC' Copenhagen Business School, CBS, Frederiksberg.

Who Should Make Kroner? A Review of Danmarks Nationalbank's Analysis of CBDC. / Bjerg, Ole; Hougaard Nielsen, Rasmus.

Frederiksberg : Copenhagen Business School, CBS, 2018.

Research output: Working paperResearch

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Bjerg O, Hougaard Nielsen R. Who Should Make Kroner? A Review of Danmarks Nationalbank's Analysis of CBDC. Frederiksberg: Copenhagen Business School, CBS. 2018.