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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

#51

Post by usrnm »

lexicality wrote: post #44
usrnm wrote: post #39

Earlier quoted context omitted.

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?

Why might someone be interested in replacing two monopolistic entities headquartered in a foreign and increasingly irrational power both of which have long histories (and recent controversies) in applying their own moralistic framework to economic activity? That's a great question!

You don't need to make any changes to your currency to create an alternative to Visa and Mastercard, all you need is political will. Russia created its own system years ago and forced both Visa and Mastercard to comply with it, it's the reason that card payments continue to work as expected inside the country. You can even still use your old physical visa or mastercard cards inside Russia, even though the companies themselves left in 2022.

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

#53

Post by lexicality »

usrnm wrote: post #51
lexicality wrote: post #44

Earlier quoted context omitted.

Why might someone be interested in replacing two monopolistic entities headquartered in a foreign and increasingly irrational power both of which have long histories (and recent controversies) in applying their own moralistic framework to economic activity? That's a great question!

You don't need to make any changes to your currency to create an alternative to Visa and Mastercard, all you need is political will. Russia created its own system years ago and forced both Visa and Mastercard to comply with it, it's the reason that card payments continue to work as expected inside the country. You can even still use your old physical visa or mastercard cards inside Russia, even though the companies t…

I'm not a finance wonk so I don't know for sure, but given how absolutely everything else in the EU works I'm fairly confident that every country has their own sovereign financial system for handling currency and then cross-border transfers are facilitated via hacks.

It would therefore follow that any international financial system would be very complicated and expensive to set up, and would be helped enormously by a burn-it-to-the-ground-and-start-again replacement system.

(...if that system was well designed, and given how everything in the EU works...)

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

#54

Post by rekgjkjrh »

444Duarte wrote: post #48
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…

Yes, everything is digital, but what changes is how sophisticated the ledger is and who controls it. The digital euro is basically a cryptocurrency, but centrally controlled. It has the benefits of transactions just being an API request. The bank would basically become just one big wallet (or the securer of lots of wallets) and would no longer have to deal with doing the transfers of money and building the bookkeepin…

So all Euros would be deposits at the ECB, is that it?

Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?

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

#55

Post by nyeah »

gethly wrote: post #50

All FIAT is already digital and most of it is actually digital. There is no need for any of this and claiming that it protects children or prevents financing of terrorism and money laundering is simply a joke. CBDC, or "digital currency", is all about control where the authority can trace every single cent, wallet or transaction and with Know Your Transaction(KYT) know about what is being paid for as well. Beside thi…

Sure, although non-governmental ledger systems have the most of the same underlying problems. They're not optimized for government control, but they enable it. Only one really big exception: I can refuse to use them.

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

#56

Post by LunaSea »

bitmasher9 wrote: post #17
LunaSea wrote: post #10

> The ECB also simulated individual holding limits of 500 euros, 1,000 euros and 2,000 euros, obtaining lower outflow estimates. Seems like we'd be going into the same direction as the US did when it banned people from holding gold from 1933 to 1975 under Executive Order 6102 ( https://en.wikipedia.org/wiki/Executive_Order_6102 ). Not a great look on the financial value and stability of a currency in my very humble,…

I think there are significant differences between the two events, with the major similarity being “there is a large change in regulation regarding how ordinary people handle money.” In 1933 the major goal was to force ordinary citizens to trade their gold for cash, and then inflate the cash. That is why it became legal to hold gold again in 1975, the dollar value became disconnected from gold. In modern Europe I don’…

This situations are not identical but if you, as a citizen, can't exchange virtual currency for some kind of token that represents the same amount of money in that currency then you are at the mercy of the banking system.

In my eyes, it also lowers the value and trust of said currency because it means that the system isn't able to fulfil IOUs.

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

#57

Post by 444Duarte »

rekgjkjrh wrote: post #54
444Duarte wrote: post #48

Earlier quoted context omitted.

Yes, everything is digital, but what changes is how sophisticated the ledger is and who controls it. The digital euro is basically a cryptocurrency, but centrally controlled. It has the benefits of transactions just being an API request. The bank would basically become just one big wallet (or the securer of lots of wallets) and would no longer have to deal with doing the transfers of money and building the bookkeepin…

So all Euros would be deposits at the ECB, is that it? Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?

> So all Euros would be deposits at the ECB, is that it?

Not necessarily, no.

> Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?

I'm not sure I follow you? I've used those terms because they describe how it works. It's hard to explain things without using the words that exist to explain those things.

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

#58

Post by soared »

PaywallBuster wrote: post #33
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

Yeah, my point is the article and study itself are FUD for the public to dissuade them from supporting a digital currency.

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

#59

Post by rsynnott »

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…

Yes. This is really more about having the option to transact without banks being involved at all.

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

#60

Post by rsynnott »

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.

Nah; there's a separate project for that, with SEPA Instant as the underlying tech. You don't need a 'digital euro' for that; the digital euro is more about having a way to transact without involving banks.
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