A new study for EP_Economics overturns conventional central bank wisdom about how a digital euro should work. jackschickler reports
Explore the policy fallout from the 2022 market crash, the advance of CBDCs and more.A digital euro system shouldn’t limit users’ holdings, a paper produced for the European Parliament said, arguing that the risks to financial stability of people deserting conventional banks are overstated.
The paper turns on its head central bankers’ conventional wisdom that individuals shouldn’t be allowed more than a few thousand euros worth of the central bank digital currency to prevent them from using it as a savings vehicle. The banking industry issued a sigh of relief when the European Central Bank’s Fabio Panetta said individual users of the putative currency would be limited toPanetta’s goals for the project are wrong, said the report produced by academicat the request of the European Parliament's Economic and Monetary Affairs Committee.
“The key role of a digital euro consists of the important role it can play as a store of value option for the public,” said Hofmann, who is an associate professor at the National University of Singapore. “All of this requires that the public’s access to a digital euro is unlimited.”“I have strong doubts about the restrictions” on holdings, socialist Dutch lawmaker Paul Tang told the chamber in an April 19 debate, arguing the CBDC should compete with banks.
Central bankers such as Panetta have warned that a mass exodus from commercial banks could choke lending to the economy and damage financial stability.has said that holdings of its own digital pound could also be limited to 10,000 pounds .
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