Banks of dierent sizes respond dierently to interest on reserves (IOR) policy. For

low IOR rates, large banks are non-responsive to IOR rate changes, leading to weak

pass-through of IOR rate changes to deposit rates. In these circumstances, a central

bank digital currency (CBDC) may be used to provide competitive pressure to drive up

deposit rates and improve monetary policy transmission. We explore the implications

of two design features: interest rate and convenience value. Increasing the CBDC

interest rate past a point where it becomes a binding 

oor, increases deposit rates

but leads to greater inequality of market shares in both deposit and lending markets

and can reduce the responsiveness of deposit rates to changes in the IOR rate. In

contrast, increasing convenience, from suciently high levels, increases deposit rates,

causes market shares to converge and can increase the responsiveness of deposit rates

to changes in the IOR rate.