Central Bank Digital Currency and Gresham’s law: An experimental analysis

2026

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This paper experimentally analyzes how Central Bank Digital Currency (CBDC) interacts with Gresham's Law, offering crucial insights into the potential impact of CBDC on monetary systems.

* Examines the behavior of participants in a laboratory experiment involving two types of money: risk-free (like CBDC) and risky (like bank deposits).
* Investigates how holding ceilings and unattractive interest rates on risk-free money influence its use as a store of value versus a medium of exchange.
* Provides evidence supporting Gresham's Law, demonstrating that safer money is hoarded when riskier alternatives are available for transactions.

Tags: CBDC, Gresham's Law, Experimental Economics, Monetary Policy, Digital Currency

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