A group of economists evaluating the potential effects of a digital euro have insisted that restricting access to the upcoming currency is necessary to preserve the current financial system. Their study follows an earlier proposal to limit digital euro deposits at the European Central Bank to €3,000 per person.Europeans’ access to a digital euro should be restricted to prevent a flight of capital from deposits at commercial banks, according to a report published by the European Central Bank.
The economists have tried to predict the impact of a central bank digital currency on Europe’s banking sector. In the absence of empirical data, they have taken into account public reactions to news about ECB’s plans to issue a digital version of the common European currency. The calculation comes after a previous suggestion that central bank digital currency accounts should be capped at €3,000 per person . That limit, proposed by ECB Board Member Fabio Panetta to ensure there is enough fiat money to support lending, sits approximately in the middle of the range, at 34%.
The ECB economists have partially based their analysis on public statements by European officials regarding the design of the digital euro. In June, Panetta said that maintaining the total digital euro holdings between €1 and €1.5 trillion would help avoid potential negative effects on Europe’s financial system and monetary policy.
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