Yes and no. If any bank really imposed a 3k Euro withdrawal limit, every rational* depositor would instantaneously pull 3k Euros out of that bank. In whatever form they could pull out fastest. (Newly-created "digital Euros" would not be my first choice in that chaotic situation.)
On the other hand, sure, it sounds scary. Which is a little strange. It's not obvious that establishing a financial "safe haven" should automatically inspire fear. To offset this hypothetical band run, they could beef up whatever deposit insurance EU bank depositors have. Or if there is solid EU-wide deposit insurance already then ... of course then we could ask an obvious follow-up question about the premise of the article.
*By "rational" here I mean to imply some degree of real-world financial literacy.
for all intents and purposes the Euro is already digital. you send money to persons and companies via instant wire transfer, you pay digitally when shopping online and you pay digitally in physical stores with your card or NFC phone.
what possible benefit over what already exists and is in wide use could a "digital euro" offered by the ECB provide to any EU citizen?
I think it would help create fintech local alternatives to Visa and Mastercard, if it gets feature parity. It could be cool and, to be honest, this market could use a bit of a shakeup.
Here in Argentina we have as altetnatives the debit card (mostly a Visa variant), and QR from MercadoPago (MercadoLibre) and Modo (¿a alliance of the banks?) and a few minor ones. Even the guy that sells dobious products in the subway or sing or just ask for money my have a QR or a text alternative (like house.banana.dog). It's not necesary to create digital pesos, they are already digital.
Both Visa and Mastercard work just fine with the regular old school euro, why would you need something entirely new to create a local competitor to an already existing service?
Why might someone be interested in replacing two monopolistic entities headquartered in a foreign and increasingly irrational power both of which have long histories (and recent controversies) in applying their own moralistic framework to economic activity?
You don't need to make any changes to your currency to create an alternative to Visa and Mastercard, all you need is political will. Russia created its own system years ago and forced both Visa and Mastercard to comply with it, it's the reason that card payments continue to work as expected inside the country. You can even still use your old physical visa or mastercard cards inside Russia, even though the companies themselves left in 2022.
I'm not a finance wonk so I don't know for sure, but given how absolutely everything else in the EU works I'm fairly confident that every country has their own sovereign financial system for handling currency and then cross-border transfers are facilitated via hacks.
It would therefore follow that any international financial system would be very complicated and expensive to set up, and would be helped enormously by a burn-it-to-the-ground-and-start-again replacement system.
(...if that system was well designed, and given how everything in the EU works...)
Visa and Mastercard are subjected to political pressures to disincentivise conducting transactions. If the market would be more diverse, these pressures would be way less effective.
If a digital € would change that is questionable though. Perhaps ambitions would get even worse.
Also a very good argument for cash. I like untracable transactions. I isn't just to benefit crime, it is also about privacy.
So there is a middleman that can be blamed or used as a fall guy or whatnot. Also, non governments can arbitrarily deny services without recourse for customers, whereas governments in developed countries have to provide justification.
I think most discussion of “digital dollars” is just jingling your keys in one hand while taking away physical currency with the other — as the final step in their long war on using cash.
> The ECB also simulated individual holding limits of 500 euros, 1,000 euros and 2,000 euros, obtaining lower outflow estimates.
Seems like we'd be going into the same direction as the US did when it banned people from holding gold from 1933 to 1975 under Executive Order 6102 (https://en.wikipedia.org/wiki/Executive_Order_6102).
Not a great look on the financial value and stability of a currency in my very humble, non-expert opinion.
I think there are significant differences between the two events, with the major similarity being “there is a large change in regulation regarding how ordinary people handle money.”
In 1933 the major goal was to force ordinary citizens to trade their gold for cash, and then inflate the cash. That is why it became legal to hold gold again in 1975, the dollar value became disconnected from gold.
In modern Europe I don’t see the same rug-pull and a digital euro will continue to be just as valuable as a physical one. There are other valid concerns for going digital-only with currency.
This situations are not identical but if you, as a citizen, can't exchange virtual currency for some kind of token that represents the same amount of money in that currency then you are at the mercy of the banking system.
In my eyes, it also lowers the value and trust of said currency because it means that the system isn't able to fulfil IOUs.
All FIAT is already digital and most of it is actually digital. There is no need for any of this and claiming that it protects children or prevents financing of terrorism and money laundering is simply a joke.
CBDC, or "digital currency", is all about control where the authority can trace every single cent, wallet or transaction and with Know Your Transaction(KYT) know about what is being paid for as well.
Beside this, they can program expiration or block a wallet or individual "coins", giving the authority absolute control over people's finances.
This is why these are so dangerous. It is an absolute end of financial sovereignty of individuals. And once implemented, no government(or rather central bank) will give such power away without a bloody fight.
So thread carefully when things like these come up. It's no joke. This is likely the most dangerous "policy" in human history. The lately discussed "chat control" or backdooring cryptography by governments does not even come close to what this is.
Sure, although non-governmental ledger systems have the most of the same underlying problems. They're not optimized for government control, but they enable it. Only one really big exception: I can refuse to use them.
The difference is that basic cryptocurrencies are decentralised. That is one of their main selling points(despite them just being a distributed ledger). But CBDCs will have a central authority with complete control over it.
> The study, requested by European legislators, was aimed at evaluating the risks that a digital currency,
On the one hand I feel stupid asking what I think are the obvious questions. On the other hand I don't feel stupid because there's no way a lot of people know the answer to these questions:
Is this "digital currency" actually just the Euro? If it is, aren't the Euros in bank's computer also digital? And why are these things given as understood by everyone when journalists write about the subject?
Yes, everything is digital, but what changes is how sophisticated the ledger is and who controls it. The digital euro is basically a cryptocurrency, but centrally controlled. It has the benefits of transactions just being an API request. The bank would basically become just one big wallet (or the securer of lots of wallets) and would no longer have to deal with doing the transfers of money and building the bookkeeping, the same way a crypto exchange doesn't send bitcoin from one wallet to another, the blockchain is the one responsible for the transfer, the exchange is only the holder of the wallet and the one that builds the transfer parameters.
As it is today, things are much more decentralized, and each bank is responsible for keeping a record of its own books, and all the protocols that automate transfers still require the bank to be responsible for all that information. Sending money from one bank to another required both banks to have an agreement with each other and a protocol regarding how they would exchange money between them, or to go through one or multiple banks, until there is a path from the original bank to the receiving one. Obviously, this was already improved by having the ECB and enforcing cross-bank mechanisms, like IBAN, but when you fundamentally change the currency to be a cryptocurrency, all of this comes embedded in the currency itself.
There's obviously a downside, which is that everything, even the smallest of purchases, is now fully trackable on a much bigger scale. The fact that money is no longer just fungible money that you can exchange at any time, but programmable money, is also a problem. You could, for example, program some money to be usable in certain ways, have money that expires, etc. Currently, if you have 1€, you have 1€, and you know that you can spend that in any place that accepts euros, and that will remain so as long as people accept euros. But now, you could have 1€, but that 1€ can only be spent in certain places (let's say restaurants), or you could have 1€ that would expire in a year if you don't spend it. That fundamentally changes the relation with money and how people quantify money, and no one really knows what the repercussions would be.
> So all Euros would be deposits at the ECB, is that it?
Not necessarily, no.
> Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?
I'm not sure I follow you? I've used those terms because they describe how it works. It's hard to explain things without using the words that exist to explain those things.
I think a driver is the idea of a European payment system. Why this should be "digital Euros" I don't clearly understand. We don't have digital USD, and we have indigenous payment systems in the US.
Cynical me thinks that someone had a meeting like "how are we going to sell this idea to people" and some consultant went "people like crypto, why don't we say it's a digital currency? The term is meaningless, so we're not technically lying".
Nah; there's a separate project for that, with SEPA Instant as the underlying tech. You don't need a 'digital euro' for that; the digital euro is more about having a way to transact without involving banks.
SWIFT is a communication layer, but banks still settle money via separate channels. Plus in many instances, international transfers may end up going through a US entity because of the USD's huge liquidity and volumes for FX exchanges; plus the largest banks being USAmerican.
The most shocking is that there are 13 banks out of 2,025 in the EU, which have so few cash, that withdrawing only 3,000EUR (per person) is enough to bankrupt them. How fragile it all is .. That's not going to end well
No. Private banking refers to for banking, investment and other financial services provided by banks and financial institutions primarily serving high-net-worth individuals (HNWIs) – those with very high income or substantial assets.
This is ECB giving normal people direct access to ECB money past banking.
it's a personal account in the ECB, it's insured by the ECB's digital printer and interest will likely be whatever the ECB decides; it'll need to pick a value that doesn't blow up commercial banks as the article says, and even if does and chooses a very low deposit limit, it'll still cause stress.
> The study, requested by European legislators, was aimed at evaluating the risks that a digital currency, essentially an electronic wallet guaranteed by the ECB, would pose to the banking sector under different scenarios, including a hypothetical "flight to safety".
I believe the idea is not to provide any interest rate, precisely so people will be inclined to hold their savings in a "regular" bank, and only use the digital euro as a "wallet" with amount limits and no interest, similar to holding the cash yourself.
That is certainly what the banks would prefer to happen; currently people are essentially forced to subsidised banks, as pretty much everyone these days is paid by bank transfer into a current account which likely pays little if any interest.
It's less clear that it would make sense not to pay interest from the ECB's pov.
> it'll need to pick a value that doesn't blow up commercial banks as the article says, and even if does and chooses a very low deposit limit, it'll still cause stress.
or, more likely, everyone in the EU will ignore this "digital euro" nonsense and it will just be another unnecessary waste of taxpayer money.
I really don't understand the hostility here. The digital euro seems like a good way to reduce the power of companies like visa and mastercard, and reduce the fees too. If the government is providing a way to pay freely in a digital way, why would I pay a company to do the same (or worse, see the last scandal between the card companies and steam)?
1. You can easily have a local payments system without creating a new digital currency. So it's not hard to make people wonder, in perfectly good faith, why those two distinct ideas are being bundled right now.
2. Before you portray disagreement as "hostility," please try to keep the site code of conduct in mind.
What makes you think that card comapnies/steam scandal wouldn’t happen with digital euro. EU could easily put some constraints on money usage and they wouldn’t need to justify it to anyone…
And the hostility probably come from experience with EU that makes decisions solely in interest of politicians and corporations instead of EU citizens in my opinion.
The EU doesn't have anything close to the police force necessary to enforce a cash ban in the face of public opposition, and doesn't have the money to pay for one.
> This is effectively already the case in parts of Scandinavia
Ironically this isn't quite as consequence-free as some people thought:
"In 2018 a former deputy governor of Sweden’s central bank predicted that by 2025 the country would probably be cashless.
Seven years on, that prediction has turned out to be pretty much true. Just one in 10 purchases are made with cash, and card is the most common form of payment, followed by the Swedish mobile payment system Swish, launched by six banks in 2012 and now ubiquitous. Other mobile phone payment services are also growing quickly.
In fact, according to the central bank’s annual payments report, published this month, Sweden and Norway have the lowest amount of cash in circulation, as a percentage of GDP, in the world.
But in the context of today, with war in Europe, unpredictability in the US and the fear of Russian hybrid attacks almost a part of daily life in Sweden, life without cash is not proving the utopia that perhaps it once promised to be.
Such is the perceived severity of the situation that the authorities are trying to encourage citizens to keep and use cash in the name of civil defence..."
Good thing about central bank holding it is that you do not need insurance. It cannot fail. All the currency that exist exists there. It is impossible for central bank to fail to fulfil their obligations or they just print more.
Bank failures comes from banks using deposits. Which can result in banks assets to be lower than deposits, say if interest rates have recently rised. Central banks should be instead fully backed.
I see no reason not to have some guide rate being paid... Or in worst case taken away. ECB set the rate to negative at one point... So that might happen again. So rate they pay might end up being negative meaning they charge you...
It’s not “digital cash”, there is no such thing as “digital cash.” It’s an account that a person has with a bank that’s intended for routine transactions, so it’s closer to a checking account than physical cash.
Great! There is little reason for loan industry and money deposit services to be coupled.
Banks lobbying for their free money from deposits is one of the reasons financial start-ups fight an uphill battle. Even though their business is less risky (no loans) they have fewer rights.
Hundreds of millions of people are not getting their deserved interest on the savings because banks managed regulatory capture.
Whenever I see the digital euro I am thinking that it is kind of pointless. The ECB would be better off introducing a demurrage version of the Euro and encourage governments to pay welfare benefits and corporate bailouts with the demurrage Euro. That way the government money will actually benefit more people than just the immediate recipients.
It will also help reduce government debt since private sector assets are public sector liabilities. Rich people don't want to be less rich and they hold at least 10% of their assets liquid and force the central bank to do QE to perform the duration transformation (which means everyone directly or indirectly holds government bonds either way).
The classical paradigm of the government issuing infinite duration money to the public is a one way ratchet. It's actually pretty insane to me that so many people think that a fundamentally broken system can be fixed by "holding it right". I mean look at the Trump administration promising reductions in debt through spending cuts and then end up with even more debt.
Clickbait title. This is a simulation of an unexpected event and IMO meant to dissuade the public from digital currency.
Yes and no. If any bank really imposed a 3k Euro withdrawal limit, every rational* depositor would instantaneously pull 3k Euros out of that bank. In whatever form they could pull out fastest. (Newly-created "digital Euros" would not be my first choice in that chaotic situation.)
On the other hand, sure, it sounds scary. Which is a little strange. It's not obvious that establishing a financial "safe haven" should automatically inspire fear. To offset this hypothetical band run, they could beef up whatever deposit insurance EU bank depositors have. Or if there is solid EU-wide deposit insurance already then ... of course then we could ask an obvious follow-up question about the premise of the article.
*By "rational" here I mean to imply some degree of real-world financial literacy.
> dissuade the public from digital currency.
Did you read the article?
The reason to move to ECB would be for ECB garanteed deposits, which many could find safer than their local bank
> Flight to safety would see 13 banks out of cash
Yeah, my point is the article and study itself are FUD for the public to dissuade them from supporting a digital currency.
[dead]
for all intents and purposes the Euro is already digital. you send money to persons and companies via instant wire transfer, you pay digitally when shopping online and you pay digitally in physical stores with your card or NFC phone.
what possible benefit over what already exists and is in wide use could a "digital euro" offered by the ECB provide to any EU citizen?
I haven't looked into it much, but I assume the point is that it avoids the SWIFT system.
I think it would help create fintech local alternatives to Visa and Mastercard, if it gets feature parity. It could be cool and, to be honest, this market could use a bit of a shakeup.
Here in Argentina we have as altetnatives the debit card (mostly a Visa variant), and QR from MercadoPago (MercadoLibre) and Modo (¿a alliance of the banks?) and a few minor ones. Even the guy that sells dobious products in the subway or sing or just ask for money my have a QR or a text alternative (like house.banana.dog). It's not necesary to create digital pesos, they are already digital.
Both Visa and Mastercard work just fine with the regular old school euro, why would you need something entirely new to create a local competitor to an already existing service?
Why might someone be interested in replacing two monopolistic entities headquartered in a foreign and increasingly irrational power both of which have long histories (and recent controversies) in applying their own moralistic framework to economic activity?
That's a great question!
You don't need to make any changes to your currency to create an alternative to Visa and Mastercard, all you need is political will. Russia created its own system years ago and forced both Visa and Mastercard to comply with it, it's the reason that card payments continue to work as expected inside the country. You can even still use your old physical visa or mastercard cards inside Russia, even though the companies themselves left in 2022.
I'm not a finance wonk so I don't know for sure, but given how absolutely everything else in the EU works I'm fairly confident that every country has their own sovereign financial system for handling currency and then cross-border transfers are facilitated via hacks.
It would therefore follow that any international financial system would be very complicated and expensive to set up, and would be helped enormously by a burn-it-to-the-ground-and-start-again replacement system.
(...if that system was well designed, and given how everything in the EU works...)
Visa and Mastercard are subjected to political pressures to disincentivise conducting transactions. If the market would be more diverse, these pressures would be way less effective.
If a digital € would change that is questionable though. Perhaps ambitions would get even worse.
Also a very good argument for cash. I like untracable transactions. I isn't just to benefit crime, it is also about privacy.
every euro account ultimately ends up on the ECB's balance sheet, so why keep middlemen?
So there is a middleman that can be blamed or used as a fall guy or whatnot. Also, non governments can arbitrarily deny services without recourse for customers, whereas governments in developed countries have to provide justification.
If they give money as some sort of relief they could specify what it can be used on: groceries, education etc
US already does that just fine with EBT.
I think most discussion of “digital dollars” is just jingling your keys in one hand while taking away physical currency with the other — as the final step in their long war on using cash.
> The ECB also simulated individual holding limits of 500 euros, 1,000 euros and 2,000 euros, obtaining lower outflow estimates.
Seems like we'd be going into the same direction as the US did when it banned people from holding gold from 1933 to 1975 under Executive Order 6102 (https://en.wikipedia.org/wiki/Executive_Order_6102).
Not a great look on the financial value and stability of a currency in my very humble, non-expert opinion.
I think there are significant differences between the two events, with the major similarity being “there is a large change in regulation regarding how ordinary people handle money.”
In 1933 the major goal was to force ordinary citizens to trade their gold for cash, and then inflate the cash. That is why it became legal to hold gold again in 1975, the dollar value became disconnected from gold.
In modern Europe I don’t see the same rug-pull and a digital euro will continue to be just as valuable as a physical one. There are other valid concerns for going digital-only with currency.
This situations are not identical but if you, as a citizen, can't exchange virtual currency for some kind of token that represents the same amount of money in that currency then you are at the mercy of the banking system.
In my eyes, it also lowers the value and trust of said currency because it means that the system isn't able to fulfil IOUs.
All FIAT is already digital and most of it is actually digital. There is no need for any of this and claiming that it protects children or prevents financing of terrorism and money laundering is simply a joke.
CBDC, or "digital currency", is all about control where the authority can trace every single cent, wallet or transaction and with Know Your Transaction(KYT) know about what is being paid for as well.
Beside this, they can program expiration or block a wallet or individual "coins", giving the authority absolute control over people's finances.
This is why these are so dangerous. It is an absolute end of financial sovereignty of individuals. And once implemented, no government(or rather central bank) will give such power away without a bloody fight.
So thread carefully when things like these come up. It's no joke. This is likely the most dangerous "policy" in human history. The lately discussed "chat control" or backdooring cryptography by governments does not even come close to what this is.
Sure, although non-governmental ledger systems have the most of the same underlying problems. They're not optimized for government control, but they enable it. Only one really big exception: I can refuse to use them.
The difference is that basic cryptocurrencies are decentralised. That is one of their main selling points(despite them just being a distributed ledger). But CBDCs will have a central authority with complete control over it.
> The study, requested by European legislators, was aimed at evaluating the risks that a digital currency,
On the one hand I feel stupid asking what I think are the obvious questions. On the other hand I don't feel stupid because there's no way a lot of people know the answer to these questions:
Is this "digital currency" actually just the Euro? If it is, aren't the Euros in bank's computer also digital? And why are these things given as understood by everyone when journalists write about the subject?
Yes, everything is digital, but what changes is how sophisticated the ledger is and who controls it. The digital euro is basically a cryptocurrency, but centrally controlled. It has the benefits of transactions just being an API request. The bank would basically become just one big wallet (or the securer of lots of wallets) and would no longer have to deal with doing the transfers of money and building the bookkeeping, the same way a crypto exchange doesn't send bitcoin from one wallet to another, the blockchain is the one responsible for the transfer, the exchange is only the holder of the wallet and the one that builds the transfer parameters.
As it is today, things are much more decentralized, and each bank is responsible for keeping a record of its own books, and all the protocols that automate transfers still require the bank to be responsible for all that information. Sending money from one bank to another required both banks to have an agreement with each other and a protocol regarding how they would exchange money between them, or to go through one or multiple banks, until there is a path from the original bank to the receiving one. Obviously, this was already improved by having the ECB and enforcing cross-bank mechanisms, like IBAN, but when you fundamentally change the currency to be a cryptocurrency, all of this comes embedded in the currency itself.
There's obviously a downside, which is that everything, even the smallest of purchases, is now fully trackable on a much bigger scale. The fact that money is no longer just fungible money that you can exchange at any time, but programmable money, is also a problem. You could, for example, program some money to be usable in certain ways, have money that expires, etc. Currently, if you have 1€, you have 1€, and you know that you can spend that in any place that accepts euros, and that will remain so as long as people accept euros. But now, you could have 1€, but that 1€ can only be spent in certain places (let's say restaurants), or you could have 1€ that would expire in a year if you don't spend it. That fundamentally changes the relation with money and how people quantify money, and no one really knows what the repercussions would be.
So all Euros would be deposits at the ECB, is that it?
Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?
> So all Euros would be deposits at the ECB, is that it?
Not necessarily, no.
> Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?
I'm not sure I follow you? I've used those terms because they describe how it works. It's hard to explain things without using the words that exist to explain those things.
Yes. This is really more about having the option to transact without banks being involved at all.
I think a driver is the idea of a European payment system. Why this should be "digital Euros" I don't clearly understand. We don't have digital USD, and we have indigenous payment systems in the US.
Cynical me thinks that someone had a meeting like "how are we going to sell this idea to people" and some consultant went "people like crypto, why don't we say it's a digital currency? The term is meaningless, so we're not technically lying".
Nah; there's a separate project for that, with SEPA Instant as the underlying tech. You don't need a 'digital euro' for that; the digital euro is more about having a way to transact without involving banks.
Isn't SWIFT a European payment system already?
SWIFT is a communication layer, but banks still settle money via separate channels. Plus in many instances, international transfers may end up going through a US entity because of the USD's huge liquidity and volumes for FX exchanges; plus the largest banks being USAmerican.
The most shocking is that there are 13 banks out of 2,025 in the EU, which have so few cash, that withdrawing only 3,000EUR (per person) is enough to bankrupt them. How fragile it all is .. That's not going to end well
So its not really about a digital euro and is actually about ECB doing private banking?
No. Private banking refers to for banking, investment and other financial services provided by banks and financial institutions primarily serving high-net-worth individuals (HNWIs) – those with very high income or substantial assets.
This is ECB giving normal people direct access to ECB money past banking.
> This is ECB giving normal people direct access to ECB money past banking.
That's one way of saying "This is normal people giving the ECB direct access to their finances past banking."
Let's not forget who is the wolf and who are the oxen in this business.
It's about people being allowed to have accounts with the ECB rather than a bank, in practice. Euros are, of course, already basically 'digital'.
How is the digital euro saved? Is it insured? Does it earn interest?
it's a personal account in the ECB, it's insured by the ECB's digital printer and interest will likely be whatever the ECB decides; it'll need to pick a value that doesn't blow up commercial banks as the article says, and even if does and chooses a very low deposit limit, it'll still cause stress.
> The study, requested by European legislators, was aimed at evaluating the risks that a digital currency, essentially an electronic wallet guaranteed by the ECB, would pose to the banking sector under different scenarios, including a hypothetical "flight to safety".
I believe the idea is not to provide any interest rate, precisely so people will be inclined to hold their savings in a "regular" bank, and only use the digital euro as a "wallet" with amount limits and no interest, similar to holding the cash yourself.
That is certainly what the banks would prefer to happen; currently people are essentially forced to subsidised banks, as pretty much everyone these days is paid by bank transfer into a current account which likely pays little if any interest.
It's less clear that it would make sense not to pay interest from the ECB's pov.
> it'll need to pick a value that doesn't blow up commercial banks as the article says, and even if does and chooses a very low deposit limit, it'll still cause stress.
or, more likely, everyone in the EU will ignore this "digital euro" nonsense and it will just be another unnecessary waste of taxpayer money.
I really don't understand the hostility here. The digital euro seems like a good way to reduce the power of companies like visa and mastercard, and reduce the fees too. If the government is providing a way to pay freely in a digital way, why would I pay a company to do the same (or worse, see the last scandal between the card companies and steam)?
1. You can easily have a local payments system without creating a new digital currency. So it's not hard to make people wonder, in perfectly good faith, why those two distinct ideas are being bundled right now.
2. Before you portray disagreement as "hostility," please try to keep the site code of conduct in mind.
What makes you think that card comapnies/steam scandal wouldn’t happen with digital euro. EU could easily put some constraints on money usage and they wouldn’t need to justify it to anyone…
And the hostility probably come from experience with EU that makes decisions solely in interest of politicians and corporations instead of EU citizens in my opinion.
How will you ignore it when they outlaw cash?
The EU doesn't have anything close to the police force necessary to enforce a cash ban in the face of public opposition, and doesn't have the money to pay for one.
Can you elaborate why they would need more police to ban cash?
If there are no ATMs, and no shops accept cash, and they no longer mint Euro currency, what is there to enforce?
This is effectively already the case in parts of Scandinavia.
> This is effectively already the case in parts of Scandinavia
Ironically this isn't quite as consequence-free as some people thought:
"In 2018 a former deputy governor of Sweden’s central bank predicted that by 2025 the country would probably be cashless.
Seven years on, that prediction has turned out to be pretty much true. Just one in 10 purchases are made with cash, and card is the most common form of payment, followed by the Swedish mobile payment system Swish, launched by six banks in 2012 and now ubiquitous. Other mobile phone payment services are also growing quickly.
In fact, according to the central bank’s annual payments report, published this month, Sweden and Norway have the lowest amount of cash in circulation, as a percentage of GDP, in the world.
But in the context of today, with war in Europe, unpredictability in the US and the fear of Russian hybrid attacks almost a part of daily life in Sweden, life without cash is not proving the utopia that perhaps it once promised to be.
Such is the perceived severity of the situation that the authorities are trying to encourage citizens to keep and use cash in the name of civil defence..."
https://www.theguardian.com/technology/2025/mar/16/sweden-ca...
that's the best case scenario.
Good thing about central bank holding it is that you do not need insurance. It cannot fail. All the currency that exist exists there. It is impossible for central bank to fail to fulfil their obligations or they just print more.
Bank failures comes from banks using deposits. Which can result in banks assets to be lower than deposits, say if interest rates have recently rised. Central banks should be instead fully backed.
I see no reason not to have some guide rate being paid... Or in worst case taken away. ECB set the rate to negative at one point... So that might happen again. So rate they pay might end up being negative meaning they charge you...
Paper and coins euro doesn't come with interest, I don't see why digital would. That'd still be the job of a bank.
It’s not “digital cash”, there is no such thing as “digital cash.” It’s an account that a person has with a bank that’s intended for routine transactions, so it’s closer to a checking account than physical cash.
Still doesn't mean you should get interest just for holding digital euros. That sounds like multiplying inflation.
Maybe a specific bank account could provide interest for a specific reason, but the digital currency?
Great! There is little reason for loan industry and money deposit services to be coupled.
Banks lobbying for their free money from deposits is one of the reasons financial start-ups fight an uphill battle. Even though their business is less risky (no loans) they have fewer rights.
Hundreds of millions of people are not getting their deserved interest on the savings because banks managed regulatory capture.
Matt is that you?
It's about time to admit that enough is enough, the banks must go, a new economy where money is public thanks to cryptocurrencies MUST born.
Whenever I see the digital euro I am thinking that it is kind of pointless. The ECB would be better off introducing a demurrage version of the Euro and encourage governments to pay welfare benefits and corporate bailouts with the demurrage Euro. That way the government money will actually benefit more people than just the immediate recipients.
It will also help reduce government debt since private sector assets are public sector liabilities. Rich people don't want to be less rich and they hold at least 10% of their assets liquid and force the central bank to do QE to perform the duration transformation (which means everyone directly or indirectly holds government bonds either way).
The classical paradigm of the government issuing infinite duration money to the public is a one way ratchet. It's actually pretty insane to me that so many people think that a fundamentally broken system can be fixed by "holding it right". I mean look at the Trump administration promising reductions in debt through spending cuts and then end up with even more debt.