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Several policymakers and academic works have been discussing the nature of Central Bank Digital Currency (CBDC) as well as its debated relationship with crypto-assets. CBDC would allow the private (non-financial) sector to access the central bank’s reserves. Given its superior hierarchy in the money spectrum, CBDC adoption could trigger a strong or mild conversion from deposits, depending on its design, with strong impacts on the assets and liabilities composition and magnitude of different actors. The aim of this paper is to study the dynamics related to the transmigration process from deposits to CBDC as well as the process of money creation through a detailed step-by-step analysis, tracking the transactions between the institutions involved in its adoption. It underlines the validity of the endogenous money theory (EMT) in describing those transactions while clarifying the maintenance of the commercial banks’ vital role in the process of money creation, in a world with the emergence of CBDC. [ABSTRACT FROM AUTHOR]

We develop an innovative Stock‐Flow Consistent macroeconometric regional model with five sectors, exploiting economic and financial statistics for Campania, covering the period 1995–2018, and propose a methodology to close the financial account of the private sector when financial data are lacking. The model is then used to perform medium term Economic Policy Scenario Analysis. We find that a debt‐funded fiscal expansion has permanent positive effects on growth, with an impact multiplier above one and a medium‐run multiplier of 0.71. In the case of a balanced‐budget rule the same increase in government spending has still positive effects on growth – with a medium‐run multiplier of 0.6 – but adverse ones on the private corporate sector. [ABSTRACT FROM AUTHOR]

In response to the economic crisis unleashed by the Covid-19 pandemic, the EU authorities have launched extraordinary fiscal and monetary measures in support of member states. The impact of these measures is of great significance for Italy, the EU third-largest economy, which as a result of the pandemic has suffered a dramatic decline in GDP, and a further rise in the government debt to GDP ratio. Building on a stock-flow consistent, structural macro-econometric model, this paper shows that the currently planned EU measures are insufficient to boost the recovery of the Italian economy, and to ensure the sustainability of its government debt. The paper also assesses two potential alternative policies. A fiscal consolidation (i.e. austerity) policy would exacerbate the decline in GDP and further deteriorate the government debt to GDP ratio. By contrast, a money-financed fiscal stimulus policy could lead the Italian economy on a path of sustainable growth, with positive outcomes for employment and government finances. [ABSTRACT FROM AUTHOR]