On June 22, 2023, from 20:00 to 22:00 Beijing time, Professor Toni White, Editor-in-Chief of the Journal of Financial Economics, one of the three top journals in the field of finance, delivered an academic lecture titled "Will Central Bank Digital Currency Intermediate Banks" at the University of Michigan. This lecture marked the second session of the second module "Editor-in-Chief Lectures" of the 2023 face-to-face meeting of the chief editors of economics. The event was hosted by the School of Economics and Management at Beijing Jiaotong University and co-organized by Elsevier Group and the Economic Management Home Forum. The special lecture was conducted in the form of a Zoom online conference and was simultaneously broadcasted on two major platforms: Elsevier Video account and service account, and Management Home live streaming.

Associate Professor Xiao Di from the School of Economics and Management at Beijing Jiao Tong University presided over the lecture, and Senior Economist Li Jiaqi from the Bank of Canada and Assistant Professor Zichao from Shanghai Jiao Tong University were invited as guest reviewers. The total number of attendees exceeded 10,093, including 91 in the Zoom conference room, 7,048 on Elsevier, and 2,954 on the Management Home platform.

Opening of Special Lecture by the Editor in Chief of Journal of Financial Economics

Presided over by Associate Professor Xiao Di from the School of Economics and Management, Beijing Jiaotong University

Toni White, Editor-in-Chief of the Journal of Financial Economics, holds the Dale L. Dykema Professor of Business Administration position at the Ross School of Business at the University of Michigan. Professor White earned his Ph.D. in Economics from Princeton University in 1990, during which time he collaborated with Ben Bernanke on research. He imparts his knowledge in undergraduate, MBA, and doctoral courses covering various fields such as finance, macroeconomics, and econometrics. Professor White boasts a publication record of over 40 articles in top economic and financial journals. His research spans diverse topics, including the impact of financial frictions on corporate investment, econometric solutions to measurement errors, corporate cash policies, structural estimation of dynamic models, and monetary policy. Professor Toni White has been honored with the Jensen Prize for a top-level article on corporate finance published in the Journal of Financial Economics, and he has received the Brattle Prize twice for outstanding contributions in the Journal of Finance. Formerly the chairman of the Western Finance Association, Professor Toni White currently serves as the Editor-in-Chief of the Journal of Financial Economics.

In this lecture, Professor Toni White presented his latest research on the theme "Will Central Bank Digital Currency Displace Banks?". Professor Toni White quantified the impact of central bank digital currency (CBDC) on bank deposit services, credit supply, and stability by constructing a dynamic banking model. The results of the counterfactual analysis indicate that a $1 CBDC can marginally replace approximately 80 cents in bank deposits. Following the introduction of CBDC, the proportion of decreasing bank loans is about a quarter of the proportion of decreasing deposits. This is attributed to banks predominantly utilizing wholesale financing to substitute lost deposits, leading to increased exposure to interest rate risk and reduced resilience to negative asset shocks. If CBDC carries interest or intervenes through banks, it will capture a larger share of the deposit market and amplify its impact on loans. For small banks, the impact on loans is more pronounced due to the relatively high cost of wholesale financing.

Professor Toni White shares the latest research findings

Li Jiaqi, Senior Economist at Bank of Canada, and Assistant Professor of Capital Supermarket at Shanghai Jiao Tong University were invited to comment. Commentary guest Li Jiaqi, Senior Economist at Bank of Canada, believes that Professor Toni White's research fills the empirical gap in the impact of the introduction of CBDC on bank loans. In theory, the strong assumption that CBDC is a perfect substitute for deposits is relaxed, and many friction factors that may cause deposits to affect loans are included in the model. The guest commentator and Professor Toni White further discussed possible future research directions, including: designing CBDC in a more detailed manner to provide more information for policy makers; Consider the implementation cost of CBDC; Exploring policy responses and policy trade-offs for CBDC based on dynamic banking models.

A Wonderful Review by Li Jiaqi, Senior Economist at Bank of Canada

In response to Assistant Professor Zichao from Shanghai Jiaotong University, who served as a commenting guest, Professor Toni White's research was acknowledged for proposing a feature-rich dynamic banking model that utilizes Bank of America data to quantify the impact of Central Bank Digital Currency (CBDC). The research combines qualitative analysis with directional analysis, making interesting counterfactual deductions. Assistant Professor Zichao expressed the belief in the potential enhancement of research results by utilizing real data implemented by CBDC.

During the discussion, Professor Toni White responded to the opinions and suggestions of both commenting guests individually. He expressed appreciation, noting that these insights are valuable for advancing the research. Additionally, Professor Toni White engaged in in-depth exchanges with them on potential future research directions. This collaborative discussion aims to contribute to the ongoing development and refinement of the research.

Exciting comments from Assistant Professor of Zhichao at Shanghai Jiao Tong University

In this lecture, Professor Toni White delved into the theme of "Central Bank Digital Currency and Commercial Bank Intermediary Services," exploring the ramifications of CBDC on bank deposit services, credit supply, and stability. Through a quantitative analysis utilizing a dynamic banking model and data from American commercial banks, Professor White derived meaningful conclusions that greatly benefited participants.

Following a comprehensive summary of the research's content and contributions, two invited reviewers, Senior Economist Li Jiaqi and Assistant Professor Zichao, expanded on potential research spaces and ideas for further exploration. This provided participants with additional layers and dimensions of thinking. The ensuing Q&A session facilitated a thorough exchange of ideas among the guests and attendees.

This special lecture, featuring scholars with notable achievements in the field of financial economics on both domestic and international fronts, proved to be a fruitful platform for idea exchange. The outcomes of this discourse are poised to inspire young and mid-career scholars to conduct in-depth research on China's financial issues. Furthermore, it lays the groundwork for applying the latest research results to the development and practice of China's financial market, contributing to the ongoing enhancement of China's modern financial system.