The European Central Bank (ECB) is responding to banks’ concerns about the drawbacks of a digital euro. Piero Cipollone, a board member of the European Central Bank, and colleagues recently addressed a worry over disintermediation and deposit loss in a blog post. Their design elements aim to both reduce risks and encourage payments use.
The European Central Bank (ECB) declared in October that it was already in the planning stages of the project to create a digital euro.To stop the widespread movement of funds from bank accounts to digital wallets, they did, however, implement limitations including different income rates and caps on the amount that can be sent to these platforms.This demonstrates that banks are able to compete by increasing interest rates in order to retain deposits.
Unstable bank accounts or non-bank companies are the real threat, not a financial collapse.Banks should stop concentrating on the alleged drawbacks of CBDCs and instead take into account the other, more expansive areas, such as attracting consumer deposits.This came after President Lagarde rejected “conspiracy theories” suggesting that the digital euro could be subject to governmental control.
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