Introducing a central bank digital currency (CBDC) would accentuate the contractionary effects of monetary policy shocks, a study by the Bank of Canada has found.

The authors – researchers Saroj Bhattarai, Mohammad Davoodalhosseini and Zhenning Zhao – published the paper, Central bank digital currency and transmission of monetary policy, last month.

It begins with an unconventional interpretation of monetary policy transmission: that when the policy rate increases, the narrower spread between bond

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