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Digital euro could drain up to 700B euros of deposits in bank run, ECB says

reuters.com

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Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#31

Post by nyeah »

rekgjkjrh wrote: post #23

> The study, requested by European legislators, was aimed at evaluating the risks that a digital currency, On the one hand I feel stupid asking what I think are the obvious questions. On the other hand I don't feel stupid because there's no way a lot of people know the answer to these questions: Is this "digital currency" actually just the Euro? If it is, aren't the Euros in bank's computer also digital? And why are…

I think a driver is the idea of a European payment system. Why this should be "digital Euros" I don't clearly understand. We don't have digital USD, and we have indigenous payment systems in the US.

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#32

Post by saubeidl »

nyeah wrote: post #31
rekgjkjrh wrote: post #23

> The study, requested by European legislators, was aimed at evaluating the risks that a digital currency, On the one hand I feel stupid asking what I think are the obvious questions. On the other hand I don't feel stupid because there's no way a lot of people know the answer to these questions: Is this "digital currency" actually just the Euro? If it is, aren't the Euros in bank's computer also digital? And why are…

I think a driver is the idea of a European payment system. Why this should be "digital Euros" I don't clearly understand. We don't have digital USD, and we have indigenous payment systems in the US.

Isn't SWIFT a European payment system already?

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#33

Post by PaywallBuster »

soared wrote: post #4

Clickbait title. This is a simulation of an unexpected event and IMO meant to dissuade the public from digital currency.

> dissuade the public from digital currency.

Did you read the article?

The reason to move to ECB would be for ECB garanteed deposits, which many could find safer than their local bank

> Flight to safety would see 13 banks out of cash

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#34

Post by nyeah »

bondant wrote: post #29
dinkblam wrote: post #7

Earlier quoted context omitted.

> it'll need to pick a value that doesn't blow up commercial banks as the article says, and even if does and chooses a very low deposit limit, it'll still cause stress. or, more likely, everyone in the EU will ignore this "digital euro" nonsense and it will just be another unnecessary waste of taxpayer money.

I really don't understand the hostility here. The digital euro seems like a good way to reduce the power of companies like visa and mastercard, and reduce the fees too. If the government is providing a way to pay freely in a digital way, why would I pay a company to do the same (or worse, see the last scandal between the card companies and steam)?

1. You can easily have a local payments system without creating a new digital currency. So it's not hard to make people wonder, in perfectly good faith, why those two distinct ideas are being bundled right now.

2. Before you portray disagreement as "hostility," please try to keep the site code of conduct in mind.

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#35

Post by rekgjkjrh »

nyeah wrote: post #31
rekgjkjrh wrote: post #23

> The study, requested by European legislators, was aimed at evaluating the risks that a digital currency, On the one hand I feel stupid asking what I think are the obvious questions. On the other hand I don't feel stupid because there's no way a lot of people know the answer to these questions: Is this "digital currency" actually just the Euro? If it is, aren't the Euros in bank's computer also digital? And why are…

I think a driver is the idea of a European payment system. Why this should be "digital Euros" I don't clearly understand. We don't have digital USD, and we have indigenous payment systems in the US.

Cynical me thinks that someone had a meeting like "how are we going to sell this idea to people" and some consultant went "people like crypto, why don't we say it's a digital currency? The term is meaningless, so we're not technically lying".

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#36

Post by gus_massa »

jagermo wrote: post #24
dinkblam wrote: post #6

for all intents and purposes the Euro is already digital. you send money to persons and companies via instant wire transfer, you pay digitally when shopping online and you pay digitally in physical stores with your card or NFC phone. what possible benefit over what already exists and is in wide use could a "digital euro" offered by the ECB provide to any EU citizen?

I think it would help create fintech local alternatives to Visa and Mastercard, if it gets feature parity. It could be cool and, to be honest, this market could use a bit of a shakeup.

Here in Argentina we have as altetnatives the debit card (mostly a Visa variant), and QR from MercadoPago (MercadoLibre) and Modo (¿a alliance of the banks?) and a few minor ones. Even the guy that sells dobious products in the subway or sing or just ask for money my have a QR or a text alternative (like house.banana.dog). It's not necesary to create digital pesos, they are already digital.

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#37

Post by nyeah »

soared wrote: post #4

Clickbait title. This is a simulation of an unexpected event and IMO meant to dissuade the public from digital currency.

Yes and no. If any bank really imposed a 3k Euro withdrawal limit, every rational* depositor would instantaneously pull 3k Euros out of that bank. In whatever form they could pull out fastest. (Newly-created "digital Euros" would not be my first choice in that chaotic situation.)

On the other hand, sure, it sounds scary. Which is a little strange. It's not obvious that establishing a financial "safe haven" should automatically inspire fear. To offset this hypothetical band run, they could beef up whatever deposit insurance EU bank depositors have. Or if there is solid EU-wide deposit insurance already then ... of course then we could ask an obvious follow-up question about the premise of the article.

*By "rational" here I mean to imply some degree of real-world financial literacy.

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#38

Post by cryptonym »

bitmasher9 wrote: post #26
cryptonym wrote: post #15

Earlier quoted context omitted.

Paper and coins euro doesn't come with interest, I don't see why digital would. That'd still be the job of a bank.

It’s not “digital cash”, there is no such thing as “digital cash.” It’s an account that a person has with a bank that’s intended for routine transactions, so it’s closer to a checking account than physical cash.

Still doesn't mean you should get interest just for holding digital euros. That sounds like multiplying inflation.

Maybe a specific bank account could provide interest for a specific reason, but the digital currency?

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#39

Post by usrnm »

jagermo wrote: post #24
dinkblam wrote: post #6

for all intents and purposes the Euro is already digital. you send money to persons and companies via instant wire transfer, you pay digitally when shopping online and you pay digitally in physical stores with your card or NFC phone. what possible benefit over what already exists and is in wide use could a "digital euro" offered by the ECB provide to any EU citizen?

I think it would help create fintech local alternatives to Visa and Mastercard, if it gets feature parity. It could be cool and, to be honest, this market could use a bit of a shakeup.

Both Visa and Mastercard work just fine with the regular old school euro, why would you need something entirely new to create a local competitor to an already existing service?

Re: Digital euro could drain up to 700B euros of deposits in bank run, ECB says

#40

Post by zmgsabst »

mejutoco wrote: post #14
dinkblam wrote: post #6

for all intents and purposes the Euro is already digital. you send money to persons and companies via instant wire transfer, you pay digitally when shopping online and you pay digitally in physical stores with your card or NFC phone. what possible benefit over what already exists and is in wide use could a "digital euro" offered by the ECB provide to any EU citizen?

If they give money as some sort of relief they could specify what it can be used on: groceries, education etc

US already does that just fine with EBT.

I think most discussion of “digital dollars” is just jingling your keys in one hand while taking away physical currency with the other — as the final step in their long war on using cash.

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