A digital euro could deplete bank deposits by 8%, according to a Morgan Stanley report cited by Reuters.

  • The U.S. investment bank based its estimate on a scenario where all citizens in the euro region aged 15 and older transfer €3,000 ($3,600) into a European Central Bank (ECB) digital wallet, Reuters reported Tuesday.

  • Morgan Stanley says this is a "bear case", using €3,000 as an amount because it was mentioned by ECB policymakers as a theoretical cap for citizens to hold.

  • "This could theoretically reduce euro-area total deposits, defined as households' and non-financial corporations' deposits, by €873 billion [$1.06 billion], or 8%," Morgan Stanley said.

  • Smaller euro-zone countries – such as Greece, Latvia, Lithuania and Estonia – would be hit the hardest. In these countries, converting €3,000 would be equivalent to 22%-51% of household deposits and 17%-30% of total deposits.

  • Like the majority of major central banks, the ECB is researching the implications of a central bank digital currency, with the threat to bank deposits often highlighted as one of the potential pitfalls. Should consumers choose to use a digital euro for everyday spending, depleted bank deposits would hamper banks' ability to lend money as loans, mortgages and so on.

  • ECB President Christine Lagarde said in March that a digital euro is likely to be launched within four years.


All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.

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