Mersch says retail CBDC could destabilise financial system

Yves Mersch

 A “retail” central bank-issued digital currency could have seriously destabilising effects on financial stability, a member of the European Central Bank’s governing council argued.

Yves Mersch said the ECB’s research into the case for creating a retail CBDC showed that such a move could worsen bank runs.   

“If households were able to convert commercial bank deposits into a CBDC at a rate of one to one, they may find it far more attractive to hold a risk-free CBDC rather than bank deposits,”

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