Modelling the complex interactions between agents may be essential to understanding how central bank digital currency (CBDC) will impact the economy, new research published by the International Monetary Fund finds.

Authors Marco Gross and Elisa Letizia employ an agent-based model (ABM) to answer questions such as how much demand there is likely to be for a CBDC, how spreads will change, whether there will be an impact on bank reserves, and how monetary policy pass-through will be affected. One