Bank for International Settlements working paper finds central bank CBDC sentiment shapes media narratives and is associated with weaker crypto and bank-stock returns

The Bank for International Settlements published a working paper analysing how central banks and the media communicate about central bank digital currencies (CBDCs) across 15 major economies. Using large language models to build daily jurisdiction-level sentiment indices from central bank publications and news articles, the study finds persistent divergences in tone and focus, with central bank sentiment generally exerting a stronger influence on subsequent media sentiment than the reverse. The dataset covers January 2016 to June 2022 and includes 1,243 central bank publications and 28,831 news articles; the authors fine-tune a RoBERTa-Large classifier on 3,000 manually labelled sentences to score CBDC sentiment on a -1 to 1 scale. Media sentiment is typically more positive than central bank sentiment, especially on retail CBDCs, and tends to emphasise technology- and crypto-related aspects, while central banks focus more on payment system implications and issues such as inclusion, stability, security and privacy. Event-study results indicate a one standard deviation increase in a central bank’s CBDC sentiment is associated with around a 0.20 standard deviation rise in domestic media sentiment within five days, alongside evidence of cross-border spillovers from the Federal Reserve, the European Central Bank and the People’s Bank of China to other jurisdictions’ sentiments. Central bank sentiment is also reported to predict near-term CBDC project progress, and more positive central bank sentiment is associated with negative cryptocurrency returns and weaker stock performance of banking and payment-related firms, with effects varying by jurisdiction (including contrasting results for banks versus large third-party payment firms in China).