Morgan Stanley Says Digital Euro Could Deplete Bank Deposits by 8%: Report

Smaller countries such as Greece, Latvia, Lithuania and Estonia would be hit the hardest.

Jun 16, 2021 at 8:04 a.m. UTC
Updated Sep 14, 2021 at 1:11 p.m. UTC

A digital euro could deplete bank deposits by 8%, according to a Morgan Stanley report cited by Reuters.

  • The U.S. investment bank based its estimate on a scenario where all citizens in the euro region aged 15 and older transfer €3,000 ($3,600) into a European Central Bank (ECB) digital wallet, Reuters reported Tuesday.
  • Morgan Stanley said that is a "bear case," using €3,000 as an amount because it was mentioned by ECB policymakers as a theoretical cap for citizens to hold.
  • "This could theoretically reduce euro-area total deposits, defined as households' and non-financial corporations' deposits, by €873 billion [$1.06 billion], or 8%," Morgan Stanley said.
  • Smaller euro-zone countries – such as Greece, Latvia, Lithuania and Estonia – would be hit the hardest. In these countries, converting €3,000 would be equivalent to 22%-51% of household deposits and 17%-30% of total deposits.
  • Like the majority of major central banks, the ECB is researching the implications of a central bank digital currency, with the threat to bank deposits often highlighted as one of the potential pitfalls. Should consumers choose to use a digital euro for everyday spending, depleted bank deposits would hamper banks' ability to lend.
  • ECB President Christine Lagarde said in March that a digital euro is likely to be launched within four years.
The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
After the Terra Meltdown: What's Next for Stablecoins?

The largest token collapse in crypto history. So let Luna die.

The largest token collapse in crypto history. So let Luna die.

CoinDesk - Unknown
2
CoinDesk - Unknown
5 Key Takeaways From a16z's State of Crypto Report

The venture firm is extremely bullish on Web 3.

The venture firm is extremely bullish on Web 3.

CoinDesk - Unknown
3
CoinDesk - Unknown
Regulators Are Paying Attention to UST

The collapse of terraUSD (UST) is algorithmic stablecoins’ Libra moment.

The collapse of terraUSD (UST) is algorithmic stablecoins’ Libra moment.

CoinDesk - Unknown
4
CoinDesk - Unknown
San Francisco NFL Player Alex Barrett Taking His Salary in Bitcoin

The most valuable crypto stories for Thursday, May 20, 2022.

The most valuable crypto stories for Thursday, May 20, 2022.

CoinDesk - Unknown