Alongside other central banks, the European Central Bank (ECB) is currently exploring the potential of a Central Bank Digital Currency (CBDC). Such a significant payment innovation requires compliance with the ECB's mandate based on the Treaties of the European Union, in addition to...

The bulk of euro-denominated cash is held for store of value purposes, with such holdings sharply increasing in times of high economic uncertainty. We develop a Diamond and Dybvig model with public money as a store of value and heterogeneous beliefs about bank stability that accounts for this...