Retail CBDC Remuneration

I have been reading an interesting article by Christian Pfister about the possible remuneration of retail CBDCs. He covers a lot of points, but what stands out for me is this.

If a central bank insists on having traditional banknotes as well as a CBDC it severely limits what the central bank can do with its new digital currency to conduct monetary policy. Pfister uses the example of the Federal Reserve. While banknotes impose a minimum rate of 0%, the Fed's existing interest rate on excess reserves establishes a ceiling. So, the CBDC, if it is remunerated, has only a limited range of basis points to operate. In such a scenario, Pfister argues, CBDC remuneration might as well be set at zero and just act as a digital dollar.

I think this nullifies many of the benefits that would come from a CBDC as a form of programmable money, particularly breaking the zero lower bound. This is one reason that I keep arguing for cryptobanknotes, which would allow for a cash alternative that also allows for dropping the minimum CBDC remuneration rate below zero.