the ECB reassures banks on the fear of a flight of deposits

A digital euro will be designed as a means of payment and not as a means of investment, the ECB indicated to reassure the banks.

The digital euro project is making people cringe. If the bitcoin community is worried about privacy risks, banks are also worried about their parish. With the arrival of a digital euro, they fear a flight of their clients’ deposits. But this will not take place, indicated the European Central Bank (ECB). “To preserve the economic function of commercial banks, individual holdings in digital euros would be limited,” we can read.

“Merchants would be able to receive and process the digital euro, but would not be able to hold them at all, thus protecting the deposit base of businesses in the system banking. In addition, digital assets in euros would not earn interest,” we can read.

Several banks have called for a limit on digital euros held by individuals, to avoid a flight of deposits. If BNP Paribas pleads for a ceiling of 500 euros per individual, the ECB leans towards 3,000 euros to “effectively contain” the impact of the digital euro on deposits and liquidity © banks. Ultimately, a digital euro “will be designed as a means of payment and not as a means of investment”, summarized the ECB.

Experimentation phase

As a reminder, at the end of June, Europe presented the details of its digital eurowhich – paradoxically – takes up certain characteristics bitcoin, the world’s first cryptocurrency. The digital euro will be “accessible to everyone, everywhere and free” in the 20 countries using the single currency, explained the vice-president of the European Commission, Valdis Dombrovskis. The digital euro will make it possible to pay both online and offline. At the beginning of November, the ECB launched its experimental phase of the digital euro, for a period of 2 years. The European Parliament and the Council will then have to adopt the ECB’s proposal, before the ECB decides to choose whether it wishes to put such a digital euro into circulation, by 2027 or 2028.