On Wednesday, a survey by the Federal Association of German Community Banks (BVR) found that the introduction of a digital euro could have devastating consequences for the German banking industry. According to the investigation, if every person converted €3000 to the central bank digital currency (CBDC), only 56 out of 714 institutions would meet the legally required liquidity buffers. This would mean that banks would have to seek alternative, more expensive funding sources.
In contrast, with an upper limit of €500, only 18 institutions would have issues. The BVR suggests this limit because it views it as a digital version of cash. However, the likely scenario is that not everyone would switch the full amount, so the danger may be overstated.
Additionally, as noted by European Central Bank (ECB Director Fabio Panetta and others, the purpose of the digital euro is to be a means of payment rather than a form of investment. In a recent interview with the German business newspaper Handelsblatt, which gained access to the survey, Panetta reassured banks by stating that the ECB would “ensure that a digital euro does not involve risks for financial stability”.
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