Central Bank Digital Currency, Inflation Tax, and
Central Bank Independence?
Ohik Kwon? Seungduck Lee? Jaevin Park§
Bank of Korea Sungkyunkwan University University of Mississippi
February 13, 2020
Can introducing Central Bank Digital Currency (CBDC) improve social welfare?
We construct a dual currency model to study whether introducing CBDC with a record-
keeping technology can reduce tax evasion incentives, and further achieve a better al-
location than in a cash-only economy. In our