<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The introduction of a digital currency is part of the continuous evolution of the financial system, which has always been driven by technological innovations. For the first time in many years, Western central banks are exposed to potential currency competition. But a digital euro also has the potential to affect the two-tier structure of the grown financial system. The ECB should not engage in an interest rate competition with commercial banks and the digital currency should remain non-interest-bearing. Instead of imposing holding limits, notice periods could also be used to reduce the risk of bank runs. The ECB should limit itself and implement a hybrid digital central bank currency.</p>
</abstract>

The introduction of a digital currency is part of the continuous evolution of the financial system, which has always been driven by technological innovations. For the first time in many years, Western central banks are exposed to potential currency competition. But a digital euro also has the potential to affect the two-tier structure of the grown financial system. The ECB should not engage in an interest rate competition with commercial banks and the digital currency should remain non-interest-bearing. Instead of imposing holding limits, notice periods could also be used to reduce the risk of bank runs. The ECB should limit itself and implement a hybrid digital central bank currency.

The Digital Euro from a Historical Perspective

Wirtschaftsdienst

This work is licensed under the Creative Commons Attribution 4.0 International License.

Der digitale Euro aus einer historischen Perspektive

The introduction of a digital currency is part of the continuous evolution of the financial system, which has always been driven by technological innovations....

The Digital Euro from a Historical Perspective

Published Online: Dec 20, 2023

Page range: 807 - 810

DOI: https://doi.org/10.2478/wd-2023-0223

© 2023 Jan Greitens, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.