Central Bank Digital Euro Would Pose Several Risks — Market Talk

The European Central Bank needs to consider several risks involved in the potential creation of a central bank digital euro, ING strategist Marine Leleux says in a note. A large deposit outflow from the banking sector towards a digital euro would significantly affect European credit institutions, she says. "This could spill over to the real economy through a reduction in banks' lending capacity." The banking sector could also see additional costs related to the implementation of a digital currency. Most risks would materialize upon a sudden and significant adoption of a digital euro. While the adoption rate of other existing central bank digital currencies has been limited, estimating the uptake of a digital euro is challenging. ([email protected])