Digital euro: the ECB tries to reassure the banks


Banking misunderstanding. The establishment of a digital euro East strongly supported by the European Central Bank (ECB). However, this project – still stuck at the architectural firm stage – is encountering numerous oppositions. It must be said that these central bank digital currencies (CNBC) carry with them a strong image of monetary dystopia. Even more so if we consider that the first officially operational version was initiated by China. Nothing to see, however, on the European side, since the main obstacle happens to be the banking sector. And this is starting to annoy in the upper echelons of banking.

Digital euro: banks’ fears are “misplaced”

THE central bank digital currencies (MNBC, on CBDC in English) are regularly singled out for the risks they can represent in the context of respect for privacy. Because it is very simple to code a functionality allowing you to monitor or block user funds. Indeed, even society Tether (USDT) is able to do this on behalf of OFAC the United States…

A dematerialized growth often confused – wrongly – with cryptocurrencies. But as whistleblower Edward Snowden recently explainedwhere Bitcoin is the greatest “monetary advance” in centuries, MNBCs are “designed to deny fundamental ownership of their money to their users.

Digital euro: banks’ fears are “misplaced”Digital euro: banks’ fears are “misplaced”
The banking sector does not want to hear about the digital euro

At the same time, and in a completely different way, the arrival of these digital currencies worries even in the ranks of the banking sector. A situation at the origin of numerous disagreements on the delicate subject of the digital euro. Because, as the ECB explains in a recent report, “many banks fear that their clients do not withdraw their deposits to hold the digital euro. » But, according to Piero Cipollone, member of the ECB executive board, these fears are simply “misplaced.” »

“Despite the explicit inclusion of mitigation measures in the design of MNBCs, banking associations, bank-sponsored think tanks, and academics have continued to publish studies highlighting the risks associated with eliminating financial intermediaries from transactions. »

ECB

“A means of payment and not a means of investment”

According to ECB statements, the digital euro has not absolutely not intended to become a vehicle dedicated to investment. As a result, banks have no reason to fear a risk of loss of deposits or banking disintermediation. Because the stated objective is only to develop “ a way topay. »

“In the case of a digital euro, the combination of reverse cascading, a holding limit and no remuneration would greatly reduce the incentives to keep large sums of money in a digital euro wallet. Users would rely on the digital euro as a means of payment rather than using it to invest. »

ECB

It therefore seems that the digital euro is very clearly designed for the particular attention – or benefit – of the banking sector. But what about its users, apparently prevented from holding it as they wish. No problem on that side, since “ banks could always offer higher remuneration for holding deposits. »

No need to worry, the digital euro will not be a means for the European population to escape the hegemony of the banking sector. And, in any case, “The actual decision to issue it will be taken later. » That is, “not until the legal framework is in place and all functional features have been specified.” » So we’re talking in years…

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