e-Euro whitepaper
One option to be investigated would be to allow users to hold digital euro only up to an individual threshold at any given time. To ensure that a user can always receive a payment in digital euro and no information is disclosed on current individual holdings, a “waterfall” approach would be possible whereby any incoming digital euro in excess of the holding limit would be shifted automatically to the payee’s account in private money. However, this would require all payees to hold such an account.
Our next monetary policy only concern your “overflow income”. 😉
Demand for a digital euro could also be controlled through incentive schemes under which less attractive interest rates or service fees are applied when individual holdings exceed the aforementioned threshold.
Be creative with negative interest rates to increase compliance.
It does not seem feasible, under current circumstances, to offer unlimited holdings of digital euro to corporate entities at zero interest rates. In line with the current monetary policy stance of the ECB, the nominal remuneration rate of risk-free euro investments (for example AAA-rated government bonds with a short residual maturity) achievable by corporate entities and domestic and international investors is currently below -0.5%. Unconstrained access of these entities to a digital euro could not be offered currently at more attractive rates without disrupting financial flows and the monetary policy stance.
Starting at below -0.5%.
Beyond Zero lower bound: Remuneration of digital offline money, although technically difficult - might not be out of the question.
It could be argued that the non-remuneration of banknotes creates unintended effects, as the opportunity cost of holding banknotes varies with central bank and market interest rates. From this perspective, it would seem natural to overcome this constraint once technology allows the central bank to remunerate its money. However, designing a digital euro that is available offline would face additional challenges if it was remunerated.
src: click
