The consequences of this have caused concerns: a switch from bank deposits to a CBDC could lead to a funding shortfall in the banking system, with potential adverse effects on the supply and cost of lending to the real economy. In extreme conditions the availability of a CBDC could even increase the risk of a digital bank run.
The potential consequences of having a large portion of wealth structurally transferred from bank deposits into a CBDC could be significant for our financial system. Currently in the euro area overnight deposits of non-financial private entities amount to around € trillion, 20 per cent of the balance sheet of the banking system.