Kingdom of Bahrain: Selected issues
Electronic access:
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summary:
Interest in CBDC is growing worldwide, including in Bahrain, which has made great strides in the field of digitization of payment services and fintech. While CBDCs can offer a variety of benefits, they can also come with risks. The analysis presented in this paper aims to assess some of these benefits and risks for Bahrain. Using a model specifically calibrated and estimated for Bahrain, we quantify the potential impact of CBDC implementation on the financial system and monetary policy transmission. It has found that people’s awareness of the usefulness of CBDC is the key to widespread adoption. Although high adoption and compensation can help strengthen monetary policy transmission, they can inhibit the profitability of the banking system. Careful and analytical design can accelerate adoption while limiting risks to financial stability.
series:
Country Report No. 2023/333
subject:
Bank Deposit Central Bank Digital Currency Central Bank Policy Rate Commercial Bank Deposit Rate Financial Institutions Financial Services International Organizations Monetary Policy Technology
frequency:
usually
English
date of issue:
September 18, 2023
ISBN/ISSN:
9798400254581/1934-7685
Stock number:
1BHREA2023001
format:
paper
page:
15