The Digital Euro project. Monetary Policy Implications
DOI:
https://doi.org/10.7203/IREP.6.1.28111
Abstract
The growing digitalisation of consumer habits and, consequently, of payment methods, together with the emergence of virtual currencies based on decentralised infrastructures (cryptocurrencies, stablecoins) or the announcement of digital currency projects of a private nature and outside the traditional monetary regime (such as the failed Libra project) have led central banks around the world to develop Central Bank Digital Currencies (CBDC) projects generally aimed at complementing cash, however, they may have a significant impact on financial stability and on the liquidity and credit provision of banking intermediaries, affecting the main transmission channel of Monetary Policy, However, they can have a significant impact on financial stability and on the liquidity and credit provision of banking intermediaries, affecting the main transmission channel of Monetary Policy. For the European case, the results provided show how a limited transfer of deposits from the banking system to the digital euro would imply a reduction in credit in order for European banks to keep their Loan to Deposit ratio constant and, ultimately, their liquidity positions.
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Author Biographies
Francisco del Olmo García, Instituto Universitario de Análisis Económico y Social Universidad de Alcala
Carlos Fernando Rojas Traverso, Universidad Carlos III de Madrid
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