ECB: Digital euros are for payment only, not for investment or holding

The European Central Bank has released a document and video promoting its digital euro and trying to allay concerns about the CBDC investments it is trying to restrict.Bitcoin Miner

In a February 19 blog post, Ulrich Bindseil, Jürgen Schaaf, and Executive Board member Piero Cipollone explained that digital euro CBDCs will be “designed for payment, not for investment.

They added that many banks are concerned that their customers may withdraw their deposits to hold digital euros. “These concerns are redundant,” they said.

The European Central Bank is developing the digital euro CBDC, which has legal tender status, as a digital payment solution for Europe. However, there are growing concerns that deposits could flow from retail banks to the central bank that controls the CBDC.

It said, “CBDCs may affect financial institutions as depositors may choose to move their funds from bank deposits to the central bank.”

Digital euros not suitable for holding

As a result, digital euros held by individuals will be restricted to preserve the role of the CBDC. In addition, the CBDC will not pay interest and will not hold any shares in companies.ETC Miner

The paper notes that the “reverse waterfall” mechanism will link digital euro accounts to bank accounts, making up for any shortfalls in the latter. This reduces the incentive to hold large digital euro balances.

The ECB designed the digital euro to mitigate the risk of disintermediation and large outflows of bank deposits. The combination of restrictions, no interest and a “reverse waterfall” would discourage its use for investment purposes.

The ECB also warned about the threat of stablecoins and “e-money”, which could refer to cryptocurrencies.

“Stablecoins, e-money institutions and other narrowly focused banking institutions, some of which are sponsored by large tech companies with large customer bases, do not care about the role of banks in the economy. Non-bank institutions have no apparent incentive to limit the use of their stablecoins or the services they provide, and the use of stablecoins could become important.”

Essentially, the ECB says the digital euro is not a means of storing value.

CBDC: Central banks have more control

The ECB also released a video explaining the benefits of the digital euro. It mentions “safeguards for financial stability, such as digital euro holding limits.”

What it doesn’t mention is that transactions will be monitored, surveilled and associated with digital identities.

In an ultra-totalitarian scenario, if such legislation were to come into effect, central banks would have greater power to limit spending based on carbon use.

Earlier this month, it was reported in the media that three major European banks, including the ECB, are actively working to disrupt Bitcoin because it threatens their CBDC.

Additionally, European banks have been spreading FUD and misinformation to scare off the public.