A Model To Think About Crypto-Assets and Central Bank Digital Currency

The new EconPol Policy Report introduces digital assets, crypto assets in general, and Central Bank Digital Currency in particular, into an otherwise standard New-Keynesian closed economy model with Financial Frictions. This setting is used to study the impact of a change in preferences towards the use of digital assets and to address whether the emergence of this type of instruments affect the transmission of monetary policy shocks. In this context the paper analyzes the introduction of Central Bank Digital Currencies. The model is stylized but it could be a baseline for the design of models for quantitative analysis.