Bank of Canada Staff Working Paper 2021-65: 'Predicting the Demand for Central Bank Digital Currency: A Structural Analysis with Survey Data'

'Predicting the Demand for Central Bank Digital Currency: A Structural Analysis with Survey Data'

Jiaqi Li

With 14% of central banks at the pilot stage of exploring a possible future Central Bank Digital Currency (CBDC), this paper seeks to address three related questions;

• What would be the demand for a CBDC?

• How would different design attributes affect demand?

• To what extent would a CBDC impact the demand for cash and deposits?

The attributes identified which changed the demand for a CBDC were budgeting usefulness, anonymity, bundling of bank services and the rate of return. These attributes were compared with a baseline CBDC and the variance ranged from 4-52% depending on the extent to which a CBDC was seen as cash-or deposit-like.

Model approach