Retail CBDC would extend central bank balance sheets – ECB paper

Frequent fine-tuning of monetary policy operations could become the norm

CBDC building GettyImages-1818238175

A retail central bank digital currency (rCBDC) would require higher commercial bank reserves, additional liquidity from central banks, or more monetary policy operations, a new paper from the European Central Bank (ECB) has found.

The authors – Enea Caccia, Jens Tapking and Thomas Vlassopoulos – argue that a rCBDC would not necessarily reduce commercial bank deposits. In a positive interest rate environment, demand for an unremunerated CBDC would result in higher commercial bank deposits, they

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