A report published by Copenhagen Economics in late December found a digital euro could negatively impact economic activity in the EU, permanently reducing GDP by 0.12 to 0.34%. With a €3,000 holding limit, a central bank digital currency (CBDC) could result in up to €739 billion in deposit outflows from banks if there were 100% take up.
That could cost banks €20.4 billion a year in additional funding costs, resulting in them passing on higher lending charges. It’s the impact on lending that is reflected in the GDP figures.
The Copenhagen Economics research was commissioned by the European Banking Federation, which briefed it to explore the impact of a digital euro on financial stability and consumer welfare.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
