Digital Euro Could Trigger Substantial Bank Deposit Outflows: ECB Study Finds

A simulation study by the European Central Bank (ECB) has revealed a potential risk for commercial banks in the eurozone should a digital euro be introduced. The study, commissioned by European lawmakers to assess the banking sector’s risks, suggests that approximately 700 billion euros could leave bank deposits if a digital euro is adopted. This significant withdrawal could impact around a dozen banks across the eurozone and trigger liquidity issues. The ECB views digital currency as an alternative to U.S.-dominated payment methods. However, bankers and some lawmakers are concerned about its potential impact on bank funds.