Do these transactions increase the stock of money

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Question: Imagine a hypothetical world in the future where households and businesses do not have bank deposits in banks but hold an account at the central bank instead, through which they own central bank digital currency (CBDC). In that new world, banks do not offer deposits but still provide loans.

Assume banks, households and businesses all have an account at the central bank with CBDC. A bank pays its employee $3,000 with CBDC and makes a $10,000 loan to a businesses in CBDC. Represent the effect of these two transactions on the bank's balance sheet and on the central bank's balance sheet. Do these transactions increase the stock of money in the economy?

Reference no: EM133328174

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