Banks criticise the Digital Euro
Source: www.TKP.at, Thomas Oysmüller
It also seems to be dawning on the banks: The digital euro could ultimately make many financial institutions redundant
In the middle of the preparatory phase for the CBDC euro, German banks are beginning to defend themselves against the ECB’s monetary project. The German Banking Industry (DK) – which represents the interests of German financial institutions – is worried about its own existence. In the Finance Committee of the Bundestag, the president of the savings banks demanded a “holding limit” of a few hundred euros. Without an upper limit, if the CBDC euro becomes a “store of value”, i.e. is used for speculation or saving, there are fears for “financial market stability”.
ECB instead of savings bank
Without an upper limit, the liquidity of some financial institutions could be jeopardised, according to DK. Fundamental critics of the CBDC have been warning about this for a long time: a CBDC would have the radical consequence that most small and medium-sized banks could disappear. The final step would be for every citizen to have an account directly with the central bank, as the CBDC euro will ultimately always be linked to the ECB. The DK’s criticism has given new impetus to these warnings.
The Handelsblatt reported on Wednesday:
If there is no upper limit, the German Banking Industry (DK) – the joint interest group of German financial institutions – fears a high outflow of deposits under certain circumstances. This could have a negative impact on the scope and costs of lending, says the DK, as the liquidity of some banks could fall. However, the specific effects would depend on the business model of the respective bank.
The planned digital euro must therefore remain limited to its function as a means of payment and “must not be able to be misused speculatively as a store of value”, warns the DK in a recent statement. “To this end, the legislator must stipulate a legally secure, low three-digit holding limit and a ban on interest.
DK also criticises the ECB for playing “too important a role in the implementation of the project”.
The ECB (naturally) rejects the criticism. The digital euro will not be used as an “investment”, but as a means of payment, it explains in a recent publication. There will definitely be a “holding limit”. In addition, credit balances will “not bear interest”. However, the possibility of negative interest rates is not mentioned. Technically, it would simply be possible for the money in the account to earn negative interest and become worth less every day.
Either – according to the explanation – via the current banking app or via a “new smartphone wallet”. It would not be surprising if this wallet were to be integrated into the EU’s eID. At least that is the assumption of critics who want to see the CBDC as the final step towards completely transparent citizens.
Handelsblatt explains the timetable: “However, it is not yet clear whether the central bank digital currency will actually be implemented. The EU member states and the European Parliament have to decide on this. If they agree, a digital version of the euro would probably not be introduced until 2027 at the earliest.”
Ronnie Grob, editor-in-chief of Schweizer Monat, shared a current assessment of this on Kontrafunk. Rolling out the CBDC euro is a big deal, “it will most likely come when there are major problems in the financial market that can then be solved with this new money.”
Last week, a TKP report caused a stir when it reported on a recent paper from the German Ministry of the Interior on the digital euro. It clearly stated that the CBDC euro can be programmed for a specific purpose, among other things. Ronnie Grob also spoke about these aspects in the latest interview. Grob’s conclusion: “CBDC is total surveillance money, where anything is possible. ”
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