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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

#61

Post by gethly »

nyeah wrote: post #55
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.

The difference is that basic cryptocurrencies are decentralised. That is one of their main selling points(despite them just being a distributed ledger). But CBDCs will have a central authority with complete control over it.

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

#62

Post by rsynnott »

tokai wrote: post #5

So its not really about a digital euro and is actually about ECB doing private banking?

It's about people being allowed to have accounts with the ECB rather than a bank, in practice. Euros are, of course, already basically 'digital'.

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

#63

Post by rsynnott »

arielcostas wrote: post #47
baq wrote: post #3

Earlier quoted context omitted.

it's a personal account in the ECB, it's insured by the ECB's digital printer and interest will likely be whatever the ECB decides; 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. > The study, requested by European legislators, was aimed at evaluating the risks that a digital currency, essentially an…

I believe the idea is not to provide any interest rate, precisely so people will be inclined to hold their savings in a "regular" bank, and only use the digital euro as a "wallet" with amount limits and no interest, similar to holding the cash yourself.

That is certainly what the banks would prefer to happen; currently people are essentially forced to subsidised banks, as pretty much everyone these days is paid by bank transfer into a current account which likely pays little if any interest.

It's less clear that it would make sense not to pay interest from the ECB's pov.

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

#64

Post by Ekaros »

alistairSH wrote: post #2

How is the digital euro saved? Is it insured? Does it earn interest?

Good thing about central bank holding it is that you do not need insurance. It cannot fail. All the currency that exist exists there. It is impossible for central bank to fail to fulfil their obligations or they just print more.

Bank failures comes from banks using deposits. Which can result in banks assets to be lower than deposits, say if interest rates have recently rised. Central banks should be instead fully backed.

I see no reason not to have some guide rate being paid... Or in worst case taken away. ECB set the rate to negative at one point... So that might happen again. So rate they pay might end up being negative meaning they charge you...

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

#66

Post by nabla9 »

carlosjobim wrote: post #19
nabla9 wrote: post #8

Earlier quoted context omitted.

No. Private banking refers to for banking, investment and other financial services provided by banks and financial institutions primarily serving high-net-worth individuals (HNWIs) – those with very high income or substantial assets. This is ECB giving normal people direct access to ECB money past banking.

> This is ECB giving normal people direct access to ECB money past banking. That's one way of saying "This is normal people giving the ECB direct access to their finances past banking." Let's not forget who is the wolf and who are the oxen in this business.

Wolf: private banks.

Oxen: small worth individuals.

Savior: ECB who gives individuals same access to ECB accounts as banks have.

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

#67

Post by jagermo »

gus_massa wrote: post #36
jagermo wrote: post #24

Earlier quoted context omitted.

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.

We have that too, but it basically moves money around, like a debit card. A few key features from credit cards are missing, like reserving an amount for a car rental. That would be the most relevant thing to get right.
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