Abstract ：
We study the growth effects of a central bank digital currency in a closed overlapping generations economy with an AK production technology and cash-in-advance constraints. Working generations can hold interest-bearing bank deposits as well as money balances in their portfolios. Money can be central bank digital money or physical money. Holding physical money involves transaction costs, whereas digital currency does not. Private banks intermediate transactions between workers and entrepreneurs. The results indicate that replacing physical currency with central bank digital currency lowers transaction costs, raises the balanced economic growth rate, and possibly reduces the long-term inflation and nominal interest rates.

Keywords : transaction costs, central bank digital currency (CBDC), cash-in-advance constraint, balanced growth
JEL Classification : D15, E42, E44, E58