Simulating the Adoption of a Retail CBDC

C. León, Jose Moreno, Kimmo Soramaki

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Abstract

We use agent-based modelling to build a digital twin of the retail payment system, where heterogeneous consumers and merchants interact, learn, and adapt as they meet and use different monies and payment instruments. As we introduce an rCBDC, the model simulates its adoption. We calibrate this digital twin to Spain’s retail payment ecosystem. We run hypothetical scenarios that correspond to public discussions about the digital euro. Results show that introducing an rCBDC without attractive design options and stimulus results in low and slow adoption. Results suggest that the reverse waterfall functionality, a positive remuneration spread, and the distribution of government subsidies via rCBDC are effective to foster adoption; yet, the distribution of government subsidies via rCBDC is the only one that creates incentives to reduce the use of cash. Balance limits and top-up limits are effective to restrain adoption. Results also suggest that combining design options and stimulus with limits to holding rCBDCs could aid to achieve a sweet spot of adoption.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages36
Volume2023-018
Publication statusPublished - 26 Jul 2023

Publication series

NameCentER Discussion Paper
Volume2023-018

Keywords

  • payments
  • money
  • agent-based modelling
  • simulation
  • digital twin

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