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Private Digital Currency and Monetary Sovereignty

Recently, many central banks are considering issuing a central bank digital currency (CBDC). One motivation for
issuing a CBDC is to maintain monetary sovereignty, i.e., the ability to control monetary policy and fulfill the role as the lender of last resort. There is a concern that the adoption of digital currencies and the declining use of central bank money can undermine monetary sovereignty. This paper by the Bank of Canada studies how the adoption of a private digital currency and declining use of central bank money affect monetary sovereignty in terms of monetary policies, and whether a CBDC can improve these policies