The Adoption of Central Bank Digital Currency.

This article investigates the adoption dynamics of Central Bank Digital Currency (CBDC) within a partial equilibrium framework, emphasizing four key design features: remuneration, monetary incentives, interoperability, and platform architecture. Using a calibrated model focused on the digital euro, the study finds that a one-layer architecture—where the central bank (CB) directly manages the CBDC platform—facilitates achieving a target adoption rate of 60% and a transaction volume equal to 5% of the M1 monetary aggregate, provided substantial improvements in platform productivity and appropriate subsidies are implemented. In contrast, a two-layer architecture involving public-private partnerships faces significant challenges due to misaligned incentives, making the target adoption difficult to reach. The analysis also shows that CBDC is likely to outcompete stablecoins but struggles to gain adoption against debit cards, highlighting that competition from traditional private digital payment methods poses a greater obstacle than stablecoins.