no longer be available ), improving its capacity to stimulate the economy in extreme conditions without necessarily resorting to unconventional measures. 21 a symmetrical mechanism would be at work in upturns, when an increase in the remuneration of the cbdc ( which would represent the floor of market rates ) would force banks to take swift action to also increase the remuneration of their deposits. a shift from interest - free cash to an interest - bearing cbdc would affect seigniorage in multiple ways : in addition to the direct effect on interest payments by the central bank ( which would have a negative impact on seigniorage ), it would have indirect effects by reducing the costs of supplying cash ( positive impact ) and by increasing the demand for central bank liabilities ( positive impact ). the overall effect is ambiguous, but it could be non - negligible and have non - trivial distributional consequences : central bank profits, transferred to the state and used as the state sees fit, could change on the contrary, a cbdc without interest would be comparable to cash. for example, a ceiling on individual holdings of cbdc could limit the number or size of payments, as the recipients ’ holdings of cbdc would have to be known in order to finalize the payment. see gurtler, s., and rasmussen, s. central bank digital currency in denmark?, december 2017. see bank for international settlements, ” central bank digital currencies ”, march 2018, and coeure, b. ” the future of central bank money ”, speech at the international center for monetary and banking studies, geneva, may 2018. if central banks pushed interest rates into negative territory in a world with a non - remunerated cbdc, banks would effectively avoid the negative rates by substituting reserves with digital currency. banks could adopt this same strategy in a world with physical cash, but the high cost of storing it makes this option less attractive, inducing banks to accept moderately negative interest rates. significantly once currency holders are remunerated. the political economy consequences of this should not be underestimated. turning now to the specifics of cbdc implementation, central banks should decide whether cbdcs should be token - based – whereby each token represents a particular denomination of the currency, like banknotes – or, like bank deposits, account - based, whereby holdings are accounting records. again, this choice would have important consequences for a number of key issues such as anonymity

, the average value of ips is £800, more than an ordinary cash payment and similar to a traditional credit transfer. demirguc, a., klapper, l., singer, d., ansar, s., and hess, j. the global findex database 2017 : measuring financial inclusion and the fintech revolution, world bank group, 2018. source : survey on household income and wealth, banca d ’ italia. distribution and have little or no formal education. to the extent that consumers have no access to bank accounts – and thus to digital payment tools – for reasons other than cost, the introduction of a cbdc would not improve the situation. again, at this stage the available evidence is at best insufficient to justify introducing a cbdc, in spite of the importance of the goal of improving financial inclusion. 9 the introduction of a digital means of payment could be justified by the objective of reducing the cost of cash i. e. outlays for its production, transportation, disposal, etc. recent estimates suggest that these costs amount to about half of a percentage point of gdp in the european union every year, 10 or to around €76 billion. by way of comparison, this figure amounts to almost half of the annual eu budget. these estimates are a lower bound of the actual costs, since they do not include households ’ costs, such as the time it takes to obtain banknotes ( shoe - leather costs ), which are difficult to estimate. however, they are shrouded in uncertainty ; moreover, central banks, commercial banks and all those who handle cash are constantly striving to improve efficiency. would the cost of providing a cbdc be lower than that of cash? the costs of managing cash are due to its physical nature and in a digital world they would disappear. non - monetary costs, such as households ’ shoe - leather costs of finding a cash provider, would also disappear if cash were accessible via the smartphone in our pocket. hardware and software costs would, instead, increase. however, digital technology already plays a crucial role in the financial sector. it is used to transfer commercial bank money, to buy and sell securities, and to process information. it is continuously tested and updated and protected against risks, first and foremost cyber risk. the technology needed to transfer digital cash would likely have strong complementarities with the existing digital networks and infrastructure. this suggests that the overall costs of providing a means of payment may well decrease with