The Digital Euro as a Monetary Anchor of the Financial System - 0 views
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John Kiff on 15 Apr 23The European Money abd Finance Forum (SUERF) published a paper that disputes the European Central Bank (ECB) two of the three "monetary anchor" digital euro issuance rationales. First, to be an anchor for commercial bank deposits, guaranteeing their convertibility into central bank money, the ECB would have to allow unlimited access to digital euros as a store of value, whereas the ECB envisages very limited CBDC holdings as a means of payment. Second, to be an anchor for maintaining the central bank's control over the financial system, it is crucial that banks need central bank money as a means of payment and settlement. Thus, it is the holding of central bank money by banks, and not by non-banks, that is required as the ultimate monetary anchor for the financial system. Finally, the experience of several major central banks shows that the appropriate response to the declining use of cash in retail payments is not a CBDC, but the orchestration of competitive national retail payment systems.