ECB head: ECB is open to digital euros, but does not want citizens to hold too much

Ulrich Bindseil, Head of Market Infrastructure and Payments at the European Central Bank (ECB), concluded in a recent work report on the central bank's digital currency (CBDC) released on January 3 that the ECB remains open to digital euro equivalents, But hope to prevent citizens from holding too much. The paper discusses the prospects of issuing a CBDC for the European Union and discusses the differences between this currency and cryptocurrency stablecoins.

For Bindseil, issuing a European CBDC has both advantages and disadvantages, and the EU should address these issues first. Specifically, Bindseil proposed a two-tiered interest rate system that provides "unattractive" interest rates for holdings that exceed a certain threshold. He said this would reduce the likelihood that savers would sell fiat currency to obtain CBDC during a crisis. In this case, it may be easier for depositors to transfer funds out of the ECB's jurisdiction than through the banking system, which is equivalent to running a bank. Bindseil concluded: "By using a well-tested tiered interest rate tool, it seems to be a way to ensure that the number of CBDCs is well controlled."