00000cam 2200000zi 4500 9.963935 CaOODSP 20260630144958 m o d f cr cn||||||||| 260630t20262026onca ob f000 0 eng d CaOODSP eng rda CaOODSP FB3-5/2026-21E-PDF Cheng, Yuteng, author. Data externalities, market power, and the optimal design of central bank digital currencies / Yuteng Cheng, Jonathan Chiu, Mohammad Davoodalhosseini, Janet Jiang. [Ottawa] : Bank of Canada = Banque du Canada, 2026. ©2026 1 online resource (50 pages) : colour illustrations. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2026-21 Incorrect ISSN (1701-9397) printed in this publication. "Last updated: June 18, 2026." Includes bibliographical references (pages 35-38). "We study the optimal design of a central bank digital currency (CBDC) in an economy where private payment service providers (PSPs) collect and monetize transaction data and may have market power. Payments data create social benefits through law enforcement and monitoring but also impose privacy costs and negative externalities by enabling profiling and surplus extraction. In our model, the central bank chooses CBDC fees, transaction rewards, and data-collection intensity, taking into account their effects on private payment adoption. We show that a data-collecting CBDC can either raise or lower private payment adoption and aggregate data production relative to cash, depending on the balance between PSP market power and the social costs of privately monetized data. In a calibration to the U.S. economy, the introduction of CBDC raises aggregate data collection, private PSP market share, and PSP profits. But when PSP competition is stronger, data are more valuable, or data-processing costs are lower, the optimal CBDC policy reduces aggregate data production if negative data externalities are sufficiently strong"--Abstract, page [1]. Central bank digital currencies Econometric models. Payment Econometric models. Data protection Econometric models. Monnaie numérique de banque centrale Modèles économétriques. Paiement Modèles économétriques. Protection de l'information (Informatique) Modèles économétriques. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2026-21. (CaOODSP)9.806221 PDF 1.01 MB https://publications.gc.ca/collections/collection_2026/banque-bank-canada/FB3-5-2026-21-eng.pdf