The European Central Bank (ECB) is firing off on banks’ fears of a possible negative impact of a digital euro.
In a very recent blog post, ECB board member Piero Cipollone together with colleagues addressed a concern that could arise from disintermediation and deposit loss, and their design features aimed to encourage payments use and prevent risks at the same time.
In the October declaration, the European Central Bank (ECB) announced that it was already in the preparatory stage for the project on a digital euro. However,they gave out measures such as multiple income rates and limits to amounts to be forwarded to digital wallets for example in order to prevent the mass transfer of money from bank accounts to digital wallets. This also confirms that banks can compete by raising interest rates to keep deposits.
It’s not a financial crisis but unstable bank accounts or non-bank entities that cause a nightmare. Banks should rather consider the other wider areas like customer deposit attraction, as opposed to focusing on perceived CBDC disadvantages. This was after the dismissal of the “conspiracy theories” by President Lagarde about the digital euro having the potential for government control.
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