European Central Bank executives post: double-layer CBDC mechanism may solve financial disintermediation and crisis

Since the second half of 2019, the senior leaders of the European Central Bank have changed their past enthusiasm towards the CBDC, and frequently blown air, indicating their embrace of the CBDC.

In fact, from several recent report, the quality high, to discuss issues of deep, can one say ECB (Editor's note: European Central Bank, the same below) for the CBDC research has been carried out in a more in-depth. For example, "Exploring the Anonymity of Central Bank Currency" published in the Central Bank's publication IN FOCUS in the past December shows that more than a dozen EU central banks have cooperated with Accenture and R3 to develop and design a "European chain" bookkeeping system, which has been proof of concept to address the balance CBDC micropayments privacy and money laundering.

At the beginning of the new year, Ulrich Bindseil, ECB's head of market infrastructure and payments, published an in-depth research report: Tiered CBDC and the financial system. Its focus is CBDC Depending on the application, design stratified interest rate mechanism to resolve banking institutions to issue intermediation (ie financial disintermediation) CBDC issue may bring.

The report consists of 8 sections. Section 5 focuses on the CBDC stratification and its interest rate mechanism. The main content is introduced as follows:

First, the CBDC crisis of negative interest rates theoretically possible, but in fact there is a problem of public acceptance. Panetta (Panetta, 2018,, 29) have had the idea of ​​tiered interest rate settings, but not considered a second layer of negative interest rates set design:

"In the economic downturn, depositors might quickly, free of charge (his own money) from the bank account to the account CBDC Central Bank may limit this risk, for example by setting each hold individual investors CBDC upper limit, or CBDC will hold interest rates down to zero from above certain thresholds. "

Second, the fact deposit accounts of various forms of the practice of setting different interest rates, central banks have been rich and effective experience.

The European System of Central Banks deposits for the public sector states: overnight deposit rate can not exceed unsecured market rates; deposit rate can not exceed the secured market interest rates.

Swiss central bank modeled on the Bank of Japan and other practices, the introduction of three-tier interest rate mechanism in the January 29, 2016, require each financial institution is divided into three levels in the current account of the balance of the central bank, respectively, for each level of positive interest rates, zero or negative interest rates .

There are many differences in the implementation of central bank interest rate on the deposit reserve and non-reserve, and so on.

Third, Ulrich • Binder Purcell believes these measures can be applied to CBDC accounts, financial disintermediation to solve the problem, but can also eliminate the public's doubts about holding CBDC. He proposed a tiered interest rate mechanism:

(A) The CBDC different uses of the daily pay CBDC used as a first layer, for storing a value of CBDC as the second layer.

(2) Set a different interest rate for each layer of CBDC. The function of the first layer of CBDC is daily payment. Even if the interest rate is set very low, it will not lose its attractiveness to the holder. The second-tier CBDC has the function of value storage, and the interest rate can be set a little higher, but it should not have the attractiveness of causing deposits to move, especially when the crisis comes.

(3) The advantage of the CBDC and its interest rate tiering is that when the crisis comes, the interest rate of the second-tier CBDC can be adjusted to negative to reduce the impact on bank deposits, while keeping the interest rate of the first-tier CBDC constant at most. Zero to reduce public attacks on the central bank and financial confiscation.

(4) Control the number of CBDC in each layer. The number of first-tier CBDCs given to individuals is limited to 3,000 euros per capita, which basically covers the average monthly net income of households in the euro area. Minors 'allowances can be set to zero or assigned to their parents' CBDC accounts. The first-tier CBDC for the enterprise should not be too much, ensuring that the CBDC mainly serves the purpose of serving individual citizens.

(5) The first-tier CBDC interest rate r1 can, in principle, reach the bank's excess reserve interest rate, and clearly stipulates that no negative interest rate will be implemented. The second layer of CBDC setting interest rates, even taking into account the risk premium should also be inferior to bank deposits or other short-term financial assets attractive.

(F) the first and second layers CBDC interest rate changes will be synchronized with the policy rate, the interest rate will adjust to maintain similar spreads to other central bank interest rates over a period of time in order to maintain similar spreads and other market interest rates, in principle, The goal will be to fully stabilize and regulate the motivation to hold CBDC for a period of time.

(7) Because the return rate of holding paper money is always zero, the difference between the return rate of paper money and CBDC may cause a quantitative impact on the two.

The original report link:

Tiered CBDC and the financial system

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