The digital euro could pose a threat to the European banking industry as it could drain 8% of bank deposits analysts at American investment bank Morgan Stanley say.
The concept of a “digital euro” has been highly publicized in European policy circles for months, with policymakers increasingly pushing for the issue to be addressed at a European Union level.
This latest study by a key financial stakeholder like Morgan Stanley is likely to further amplify those calls.
A key concern is that such proposals would cause “a serious drain on bank deposits.”
“This could theoretically reduce euro area total deposits, defined as households’ and non financial corporations’ deposits, by 873 billion euros, or 8%,” Morgan Stanley analysts reiterated”
The report also said smaller nations like Latvia, Lithuania, Estonia, Slovakia, Slovenia and Greece, will feel the heat even more.