Share this
The Digital Euro and Central Bank Digital Currencies: Beware of Taking-Off Too Early
by Prof. Dr. Peter Bofinger on Sep 19, 2024 9:05:25 AM
This paper, by Prof. Dr. Peter Bofinger, discusses central digital currencies (CBDCs) with an analytical focus on the European Central Bank's Digital Euro (D€) project, which provides a unique lens for assessing the potential and challenges of CBDCs. The paper differs from the literature on CBDCs and the D€ by adopting a systemic perspective that distinguishes between the role of CBDCs as a new payment object and as a new payment system based on CBDC accounts. In a worst-case scenario, the D€ project could be a total flop, with people not opening accounts and the system failing to compete with existing platforms.
This would be in line with the dismal experience of countries that have already introduced CBDCs. In a more positive scenario, many households would open D€ accounts alongside commercial bank accounts, potentially reducing the dominance of US platforms. However, even in this scenario, it is unlikely that there will be significant holdings of D€ deposits as a means of payment, making the D€ payment system an inefficient and costly detour between existing commercial bank accounts. The offline version remains difficult to justify. The CBDC tracker shows that the ECB's strong commitment to the D€ is unique among central banks in advanced economies. Many of them, including the Federal Reserve, currently rule out the option of a retail CBDC. Thus, the ECB's unconditional commitment to the D€ carries a high risk of failure. It is therefore unclear why the ECB is not considering a scheme based on the existing SEPA infrastructures.
Read the full paper here.
This article was prepared by the author/s. The views expressed in this article are the author’s own and do not necessarily reflect the views of the Digital Euro Association.
Share this
- CBDC (41)
- Events (25)
- Digital euro (22)
- Partnership (22)
- Stablecoins (21)
- ECB (6)
- Quarterly Insights (5)
- Thesis Awards (4)
- Article series (3)
- Central bank digital currencies (3)
- Jobs (3)
- Law, regulation & policy (3)
- Privacy (3)
- digital yuan (3)
- Academics (2)
- DEC23 (2)
- Digital Money (2)
- Members Assembly (2)
- MiCA (2)
- Public Hearing (2)
- Regulation (2)
- Sand Dollar (2)
- Tokenized Deposits (2)
- e-CNY (2)
- monetarypolicy (2)
- Adoption (1)
- Ai (1)
- Central Banking (1)
- Cross-Border (1)
- Crypto (1)
- DEC24 (1)
- Diem (1)
- Digital Euro Association (1)
- Digital Pound (1)
- Digital Pound Foundation (1)
- Eurocoin (1)
- Facebook Pay (1)
- FinTech (1)
- Geopolitics (1)
- Novi (1)
- Offline (1)
- Petition (1)
- Project Hamilton (1)
- Public Affairs (1)
- Ripple (1)
- Technology & IT (1)
- USA (1)
- investors (1)
- September 2024 (2)
- August 2024 (3)
- July 2024 (6)
- June 2024 (1)
- May 2024 (4)
- April 2024 (4)
- March 2024 (4)
- February 2024 (4)
- January 2024 (2)
- December 2023 (3)
- November 2023 (2)
- October 2023 (3)
- September 2023 (5)
- August 2023 (5)
- July 2023 (9)
- June 2023 (5)
- May 2023 (3)
- April 2023 (2)
- March 2023 (7)
- February 2023 (3)
- January 2023 (3)
- November 2022 (2)
- October 2022 (4)
- September 2022 (8)
- August 2022 (11)
- July 2022 (4)
- June 2022 (5)
- May 2022 (3)
- April 2022 (6)
- March 2022 (8)
- February 2022 (6)
- January 2022 (1)
- December 2021 (1)
- November 2021 (1)
- October 2021 (1)
No Comments Yet
Let us know what you think