ECB’s Nagel: Introduction of Digital Euro May Encourage Deposit Shifts
16 April 2024
By Aurėja Bobelytė – VILNIUS (Econostream) – The introduction of the digital euro could incentivise households and firms to transfer deposits into digital euros, European Central Bank Governing Council member Joachim Nagel said on Tuesday.
Speaking at the MIT, Nagel, who heads the German Bundesbank, said, ‘The digital euro will be a riskless asset issued by the central bank. Therefore, its availability could create incentives for enterprises and households to shift deposits out of the banking sector into digital euros’.
According to Nagel, bank customers transferring large amounts of their deposits into digital euros could negatively impact the supply of credit and the real economy.
‘In times of financial turbulence or heightened uncertainty, we might see abrupt and substantial outflows of money from the banking sector, which would also endanger financial stability. To avoid that, there are plans to set a holding limit for the digital euro’, he said.