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(WP1/2024) Could Uncapped and Unremunerated CBDC Accounts Disintermediate Banks?

Publish Date: : January 2024
Author:: Srichander Ramaswamy

Summary

Retail CBDC so far has remained in Sandboxes. This working paper argues why they will continue to remain in Sandboxes so long the amounts one can hold is capped at a low level. Removing the cap on holdings, on the other hand, can raise many challenges for monetary policy, financial stability and central bank independence. If we want to avoid these outcomes, retail CBDC could largely remain a thought experiment.

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