Private Digital Cryptoassets as Investment? Bitcoin Ownership and Use in Canada, 2016-2021 Staff Working Paper 2022-44 Daniela Balutel, Walter Engert, Christopher Henry, Kim Huynh, Marcel Voia We report on the dynamics of Bitcoin awareness and ownership from 2016 to 2021, using the Bank of Canada's Bitcoin Omnibus Surveys (BTCOS). Our analysis also helps understand Bitcoin owners who adopted during the COVID-19 and how they differ from long-term owners. Content Type(s): Staff research, Staff working papers Research Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods JEL Code(s): C, C1, C12, E, E4, O, O5, O51
October 12, 2022 Five things we learned about Canadian Bitcoin owners in 2021 Daniela Balutel, Walter Engert, Christopher Henry, Kim Huynh, Marcel Voia We present key findings from the 2021 Bitcoin Omnibus Survey on Canadians’ awareness and ownership of Bitcoin. Most Canadians have heard of Bitcoin, which remains primarily used as an investment. Ownership jumped in 2021, reflecting increased savings during the pandemic and greater availability of user-friendly platforms to buy Bitcoin. Content Type(s): Publications, Financial System Hub articles JEL Code(s): C, C1, C12, E, E4, O, O5, O51
Examining recent revisions to CPI-common Staff Analytical Note 2022-15 Elyse Sullivan Unusually large revisions to CPI-common in recent months stem from increased common movements across consumer price index components amid broad inflationary pressures. With recent revisions, CPI-common is more closely aligned with the Bank of Canada’s other two preferred measures of core inflation. However, caution is necessary when interpreting real-time estimates of CPI-common in the current environment. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Econometric and statistical methods, Inflation and prices JEL Code(s): C, C1, C13, C18, E, E3, E31
Archetypes for a retail CBDC Staff Analytical Note 2022-14 Sriram Darbha A variety of technology designs could support retail central bank digital currency (CBDC) systems. We develop five archetypes of CBDC systems, outline their characteristics and discuss their trade-offs. This work serves as a framework to analyze and compare different designs, independent of vendor, platform and implementation. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Central bank research, Digital currencies and fintech JEL Code(s): E, E4, E42, E5, E51, O, O3
Harnessing the benefit of state-contingent forward guidance Staff Analytical Note 2022-13 Vivian Chu, Yang Zhang A low level of the neutral rate of interest increases the likelihood that a central bank’s policy rate will reach its effective lower bound (ELB) in future economic downturns. In a low neutral rate environment, using an extended monetary policy toolkit including forward guidance helps address the ELB challenge. Using the Bank’s Terms-of-Trade Economic Model, we assess the benefits and limitations of a state-contingent forward guidance implemented within a flexible inflation targeting framework. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Central bank research, Economic models, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E27, E3, E37, E4, E5, E52, E58
Behavioral Learning Equilibria in New Keynesian Models Staff Working Paper 2022-42 Cars Hommes, Kostas Mavromatis, Tolga Özden, Mei Zhu We introduce behavioral learning equilibria (BLE) into DSGE models with boundedly rational agents using simple but optimal first order autoregressive forecasting rules. The Smets-Wouters DSGE model with BLE is estimated and fits well with inflation survey expectations. As a policy application, we show that learning requires a lower degree of interest rate smoothing. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Economic models, Inflation and prices, Monetary policy JEL Code(s): C, C1, C11, D, D8, D83, D84, E, E3, E6, E62
How does the Bank of Canada’s balance sheet impact the banking system? Staff Analytical Note 2022-12 Daniel Bolduc-Zuluaga, Brad Howell, Grahame Johnson We examine how changes in the Bank of Canada’s balance sheet impact the banking system. Quantitative easing contributed to an increase in the size of the banking system’s balance sheet and an improvement in bank liquidity coverage ratios. Quantitative tightening is expected to partially reverse these impacts. The banking system will have to adjust its liquidity management strategy in response. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Financial institutions, Financial stability, Monetary policy JEL Code(s): E, E5, E51, G, G2, G21, G23, G3, G32
The Central Bank’s Dilemma: Look Through Supply Shocks or Control Inflation Expectations? Staff Working Paper 2022-41 Paul Beaudry, Thomas J. Carter, Amartya Lahiri When countries are hit by supply shocks, central banks often face the dilemma of either looking through such shocks or reacting to them to ensure that inflation expectations remain anchored. In this paper, we propose a tractable framework to capture this dilemma and then explore optimal policy under a range of assumptions about how expectations are formed. Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Economic models, Inflation and prices, Monetary policy, Monetary policy and uncertainty, Monetary policy communications JEL Code(s): E, E1, E12, E2, E24, E3, E31, E5, E52, E58, E6, E65
Windfall Income Shocks with Finite Planning Horizons Staff Working Paper 2022-40 Michael Boutros How do households respond when they receive unanticipated income, such as an inheritance or government stimulus cheque? This paper studies these windfall income shocks through a model of household behaviour that generates a realistic consumption response for households along the entire distribution of wealth. Content Type(s): Staff research, Staff working papers Research Topic(s): Domestic demand and components, Economic models, Fiscal policy JEL Code(s): D, D9, D91, E, E2, E21, G, G5, G51
House Price Responses to Monetary Policy Surprises: Evidence from the U.S. Listings Data Staff Working Paper 2022-39 Denis Gorea, Oleksiy Kryvtsov, Marianna Kudlyak Existing literature documents that house prices respond to monetary policy surprises with a significant delay, taking years to reach their peak response. We present new evidence of a much faster response. Content Type(s): Staff research, Staff working papers Research Topic(s): Housing, Inflation and prices, Interest rates, Monetary policy transmission JEL Code(s): E, E5, E52, R, R2, R21, R3, R31