A new paper from the Deutsche Bundesbank finds that the digital euro with a €3,000 ($3,461) holding limit would have “contained” effects on banks’ liquidity.
Two economists from the German central bank, Ulrich Krüger and Lui-Hsian Wong, create a model that determines the optimal adjustment of banks’ liquidity buffers and funding structures in the context of their strategic liquidity management in response to the introduction of the eurozone’s central bank digital currency.
Krüger and Wong apply
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