Digital Bank Runs: A Deep Neural Network Approach

The introduction of Central Bank Digital Currency (CBDC) could represent a deep structural change to the financial sector, and in particular banking sector. This paper proposes Deep Neural Network (DNN) design model CBDC its potential impact on commercial banks’ deposits. proposed forecasts likelihood occurrence bank runs as function system characteristics intrinsic features CBDC. success rate sector is highly dependent design. Whether should carry any form interest, if amount be capped by account or convertibility from deposits guaranteed banks are important consider. Further, needs contribute enhancing sustainability system, hence that promotes inclusion paramount. initially calibrated with Euro area data. Results show an increase risk perception would trigger significant transfer wealth CBDC, while lesser extent also sensitive interest rate.