he Bank of England published a working paper that examined various risks to economic stability associated with central bank digital currencies (CBDC). This is reported by Cointelegraph.
The paper examines three CBDC models that differ in coverage, starting with models that only banks and non-bank financial institutions can use, and to those that can be accessed by households and non-financial institutions.
In the first case, financial institutions will be able to interact directly with the central bank to buy and sell CBDC for conditioned securities. It is assumed that financial institutions will not provide access to such currencies to households and companies that are fully funded by the money of central banks.
With the expansion of the CBDC throughout the economy, access to them will be available from both banks and households, as well as from other companies. Thus, CBDC will be able to fulfill the role of money for all participants in the economy. At the same time, only banks and non-bank financial institutions will be able to buy a digital currency from the central bank, and the rest of the economy will be able to access it through specialized exchanges.
In the third option, only banks and non-bank financial institutions gain access to the CBDC, and at least one of them takes on the role of a "narrow bank", issuing an asset fully secured by CBDC and provided to households and other companies, but not involving credit rights.