Introducing central bank digital currencies that earn interest would reduce banks’ power in the market, yielding higher rates for depositors, a new study claims.
The paper, published on July 9 by the Centre for Economic Policy Research, argues that there is an optimal rate at which interest-earning CBDCs could improve citizens’ welfare. This would be a rate that maximised the benefits to the economy without “unduly harming the banking sector”. If the CBDC paid a low rate of interest, households
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