On Monday 29 April, the Deutsche Bundesbank published a study conducted by Rhys Bidder, Timothy Jackson and Matthias Rottner, including a survey of around 6,000 German households, analysing the impact on banks, financial stability and the economy of the introduction of Central Bank Digital Currency (CBDC).
An interest in CBDC. The authors point out that few respondents are familiar with the digital euro, but in a Germany that is particularly attached to cash, they note that a majority of the sample surveyed are open to a potential CBDC. According to the authors, 87% of respondents are “open” to CBDC, while those who are “keen” about CBDC represent around 46% of the sample and those who are “reluctant” represent 7%.
Disintermediation. Examining the potential impact on banks of the introduction of CBDC, the authors tested the possibility of “slow disintermediation” (in a situation where the CBDC competes with bank deposits in normal times) as well as the risks of “fast disintermediation”, in the event of a shock leading to massive withdrawals of bank deposits.
According to the survey, cash remains the preferred form for these withdrawals, but the authors note that, faced with the possibility of general banking tensions, more than half of those surveyed plan to withdraw a proportion of their assets in the form of digital euros. This tendency would be more pronounced among people who had received additional information about the relative safety of the CBDC compared with a private currency.
CBDC calibration: limits and remuneration. The authors also examined the highly political issue of limits on the holding of digital euros. They point out that an unlimited CBDC would reduce welfare. However, they argue that with a properly calibrated holding limit, the digital euro has the potential to improve welfare.
The authors make a very cautious proposal by suggesting that, according to their model and the estimated future demand for CBDCs, the optimal limit for holding digital euro assets could be between €1,500 and €2,500.
The study also tests household behaviour when faced with different levels of remuneration for digital euro assets. However, the option envisaged for the digital euro currently rules out any remuneration: it will not be designed primarily as a store of value.
Further information: https://aeur.eu/f/c24 (Original version in French by Émilie Vanderhulst)