CBDC News

Managing Disintermediation Risks

The Dutch National Bank (DNB) has published a working paper detailing research on a transition from an economy without a CBDC to one with it. It looks at the risks, and their mitigation, and identifies that macroeconomic volatility could lead to the crowding out of bank deposits leading to less output, consumption and investment, at least initially.

The research suggested restrictions on CBDC holdings by non-residents, a cap of €3,000, interest rate charges on holdings over a given sum and central bank purchases of assets could reduce volatility. It concludes that binding caps during the transition period offer the most effective way to reduce disintermediation and output losses.

Developing CBDCs on the Cheap

Perhaps unsurprisingly, the Chief Information Officer of Bitt has recently argued that central banks should be prepared to pay for CBDCs. He argues that to fulfil the potential of CBDCs, they need a level of sophistication that the private sector is best placed to deliver.