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.
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.
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?
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.
> 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.
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.
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
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.
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.
Readit News
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.
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
Dead Comment
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.
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?
Deleted Comment
Deleted Comment
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.
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.
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.
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.
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?
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.
Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?
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.
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.