On Monday, the Institute of International Finance (IIF) published a staff assessment note on the draft digital euro legislation. It’s concerned about the impact of the central bank digital currency (CBDC) on banks, including the costs and competition. It also notes the central bank has a conflict of interest.
One general IIF observation is it believes that digital currencies and tokenized assets will exist in a multi-asset system and is concerned that a CBDC could be yet another silo. “To achieve the objectives of EU authorities, a CBDC would need to operate on platforms where other digital currencies otherwise operate,” the authors wrote.
The digital euro legislation included an impact assessment to quantify the costs, benefits and risks. While holding limits of around €3,000 have been discussed, the draft law leaves the figure up to the European Central Bank (ECB). However, they will need parliamentary input for changes. The IIF critiques the impact assessment of CBDC holding limits as “somewhat basic”. And it questioned how much it involved private sector input.
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