CBDC holdings and spending should be limited in order to reduce its demand as a store of value in competition with banks, the central bank of Colombia said.
The central bank of Colombia has not yet decided whether or not to issue a central bank digital currency , but believes that setting limits on CBDC transactions could bring about a number of benefits.
Setting limits on retail CBDC holdings could also allow regulators to deal with the tradeoff between privacy and transparency by offering diverse tiers of limits. “The introduction of the CBDC could be an attractive alternative for some risk-averse holders of other cash-like instruments,” the study reads, adding that this could impact the demand for government bonds, commercial papers and term deposit certificates. The study authors stated:
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