The digital euro… an innovation that raises concerns for commercial banks in Europe

Commercial banking institutions in Europe fear that their customers’ deposits to virtual wallets will vanish after the release of the European digital currency, the “digital euro”.

In a report published by the newspaper “La Croix” (The cross) French, writer Alain Gaimol quotes Maya Atigue, director general of the French Banking Union, as saying that there are many questions about the feasibility of issuing a digital euro “because there are already in Europe – and especially in France – very effective means of payment”.

Ateg stresses that many French people are still tied to fiat currencies. “One million French still want to receive monthly social assistance in cash. We must continue to take into account the situation of those who find it difficult to deal with digital tools,” she says.

Banks’ fears

Commercial banks are participating in the consultations of the European Central Bank with a view to issuing the new digital currency.

The European Central Bank has set up an advisory council of 30 members to prepare for this digital revolution, including representatives from 3 French banks, BPCE, Banque Postal and Societe Generale.

A spokesman for the three banks said, “We believe that it is possible to adopt an approach that achieves the goal directly, and the central bank knows very well how to exercise its authority over the banks, and therefore can impose its regulations on technology companies.”

According to the writer, the new digital currency raises the concerns of banks, because the new virtual wallets that rely on the digital euro will be kept elsewhere, which will lead to the erosion of bank deposits.

The decline in bank deposits means depriving banks of income, and the loss of one of the main sources of financing, ie loans, and this may lead to a credit crisis and the risk of economic chaos.

According to the writer, the European Central Bank is well aware of these concerns, so it is moving slowly, and plans to give a pivotal role to banks in promoting the digital euro, as is happening with coins and banknotes.

The European Central Bank has indicated the adoption of a maximum digital euro that each individual can keep in their electronic wallet, so that bank accounts are not emptied in favor of the digital euro.

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