University of Twente Student Theses


Quantifying the impact of the introduction of a CBDC by the ECB on the Dutch banking sector

Vincent, W.H. (2024) Quantifying the impact of the introduction of a CBDC by the ECB on the Dutch banking sector.

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Abstract:This research examines the financial implications of introducing a digital euro on Dutch banks, with a focus on the impact on financial intermediation, payment service disruptions, and development costs. Utilizing a literature review, analysis of banking business models, and the development of a model for evaluating financial intermediation effects, the study explores four scenarios of digital euro introduction, assessing impacts based on varying adoption levels. Sensitivity analyses concerning interest rates and holding limits were performed. Findings suggest that the introduction of a digital euro presents a manageable risk of financial disintermediation for Dutch banks, potentially leading to a maximum loss of 1.61% of total profits in 2022 under full adoption. A critical holding limit was identified at €11,701, beyond which liquidity ratios could breach legal thresholds. The study highlights the significant sensitivity of bank earnings to interest rate fluctuations and compares the financial intermediation impact with that on payment services and development costs. The analysis concludes that the digital euro’s effectiveness as a payment medium and its remuneration policies are crucial factors for its overall impact, providing essential insights for Dutch banks on navigating the financial challenges posed by the digital euro.
Item Type:Essay (Master)
Rabobank, Utrecht, Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics
Programme:Industrial Engineering and Management MSc (60029)
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