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.
Recommended Content
Editors’ Picks
Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections
MAGA trades slightly down to around $3.4 on Tuesday after rallying more than 20% since Sunday. The former President Donald Trump-based memecoin is poised for further gains as daily active addresses and network growth metrics rise, signaling increased network usage and adoption.
Bitcoin ETFs beat Gold ETFs with 65% gain since launch
Bitcoin ETFs have reshaped the digital asset investment landscape since their approval in January. Their total assets under management climbed over $70 billion during the weekend, placing them ahead of other investment products, including gold.
XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand
Ripple's XRP is trading at $0.5050 up slightly by 0.2% in the past 24 hours as it struggles to sustain a move above a key symmetry triangle resistance. Meanwhile, in its recently released Q3 report, Ripple noted the rising listing and relisting of XRP across crypto exchanges and global platforms.
Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF
Ethereum is trading near $2,420, down about 1% on Monday, but could bounce off a key descending trendline close to the $2,258 historically high demand zone. Meanwhile, the State of Michigan pension fund revealed an investment of $11 million in ETH exchange-traded funds.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.