Is CBDC undermining the process of money creation?

Several policymakers and academic works have been discussing the nature of Central Bank Digital Currency (CBDC) as well as its debated relationship with cryptocurrencies. 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. Building on Bibi and Canelli (2023), 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.