In a report on new types of digital money, Danmarks Nationalbank analyzes the popular motivations for a central bank digital currency (CBDC) amongst developed nations. As context, Denmark is one of the EU countries that is not part of the euro currency zone. A core rationale promoted by the European Central Bank (ECB) is for a retail CBDC to act as a trust ‘anchor’ for digital money once cash disappears. Denmark’s central bank highlights that its domestic payments are already primarily digital – just over 10% of physical purchases in Denmark use cash – and it does just fine without a CBDC.
The few citizens that store money in cash cite the motivation as anonymity rather than trust. There is “nothing to indicate that citizens use and hold cash because they regard it as more secure than bank deposits,” says the report.
Denmark has a couple of factors that it believes influence this position. One is instant payments help ensure trust in digital money so people can quickly move money between different banks. Another is the central bank guarantee for bank deposits up to a limit, which now exists in many developed nations.
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