Examining the impact of a central bank digital currency on the access to banking

Abstract

This study examines the potential social change associated with technological innovations such as a central bank digital currency (CBDC), via the CBDC's ability to reduce the level of a nation's unbanked and underbanked households. We use data on the United States' unbanked and underbanked populations from the Federal Deposit and Insurance Agency. Our results reveal that an increased public awareness in CBDCs is linked to a statistically significant and economically meaningful decrease in the number of unbanked individuals in the society. However, this reduction is not evenly distributed across age groups, with a more notable impact observed among individuals aged 34–64 years old. Furthermore, our findings demonstrate that an increased awareness of CBDCs correlates with reduced levels of unbanked and underbanked individuals across different levels of college education and income. It is noteworthy that awareness of CBDCs has a particularly significant impact on unbanked and underbanked populations among society's most vulnerable individuals.