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    Question

    CBDC concern for monetary policy

    transmission:
    A Reduced seigniorage revenue for the central bank. Correct Answer Incorrect Answer
    B Increased competition among commercial banks, leading to lower lending rates. Correct Answer Incorrect Answer
    C Disintermediation of commercial banks, potentially weakening the bank lending channel. Correct Answer Incorrect Answer
    D Enhanced ability for central banks to implement negative interest rates effectively. Correct Answer Incorrect Answer

    Solution

    A concern regarding Central Bank Digital Currency (CBDC) for monetary policy transmission is the disintermediation of commercial banks, potentially weakening the bank lending channel. If individuals hold CBDC directly with the central bank, it could reduce deposits in commercial banks, impacting their ability to lend.

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