Is there a digital currency on the horizon for the eurozone?

The Centre for European Reform (CER), a think-tank focused on advancing the European Union’s (EU’s) global presence, has argued that introducing a CBDC would ultimately prove to be of little benefit to consumers in Europe. “Europe’s banking sector is robust, and deposits are guaranteed up to a generous limit. Consumers, quite reasonably, consider bank savings to be about as safe as cash. And CBDCs would probably be provided via commercial banks, and could allow payments through a mobile app, a card, or a similar device,” Zach Meyers, a CER senior research fellow, wrote on June 7. “So a CBDC could look similar to any bank account today. State-backed savings options are already available for those who want them. Whether consumers and retailers would actually prefer to use a CBDC for payments - rather than private payment services like today’s cards - is therefore not obvious.”

...“And if consumers have more of their savings in CBDCs and less in bank deposits, then banks will need more expensive wholesale funding to provide loans to customers,” Meyers added. “That would drive up the cost of finance for households and businesses.” As such, Meyers proposed, CBDCs would require caps and limitations to prevent bank runs.