New Findings on Investment Described by Investigators at Washington University St. Louis (Central Bank Digital Currency: When Price and Bank Stability Collide): Investment

2024 AUG 02 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Fresh data on Investment are presented in a new report. According to news reporting out of St. Louis, Missouri, by NewsRx editors, research stated, “This paper shows the existence of a central bank trilemma. When a central bank is involved in financial intermediation, either directly through a central bank digital currency (CBDC) or indirectly through other policy instruments, it can only achieve two of three objectives: a socially efficient allocation, financial stability (i.e., absence of runs), and price stability.”

Our news journalists obtained a quote from the research from Washington University St. Louis, “In particular, a commitment to price stability can cause a run on the central bank. Implementation of the socially optimal allocation requires a commitment to inflation. We illustrate this idea through a nominal version of the Diamond and Dybvig (1983) model.”

According to the news editors, the research concluded: “Our perspective may be particularly appropriate when CBDCs are introduced on a wide scale.”

This research has been peer-reviewed.

For more information on this research see: Central Bank Digital Currency: When Price and Bank Stability Collide. Journal of Monetary Economics, 2024;145. Journal of Monetary Economics can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands. (Elsevier - www.elsevier.com; Journal of Monetary Economics - http://www.journals.elsevier.com/journal-of-monetary-economics/)

Our news journalists report that additional information may be obtained by contacting Linda Schilling, Washington University St. Louis, Olin Sch Business, Simon Hall, Brookings Dr, St. Louis, MO 63130, United States. Additional authors for this research include Jesus Fernandez-Villaverde and Harald Uhlig.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jmoneco.2024.01.007. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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