Does the digital euro have a future?

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The media is widely discussing the disappearance of banknotes and coins, which would be replaced by computer applications on various media, including typical credit cards. The reasons for this measure are several, the most argued being that the change is already occurring spontaneously. However, this would require all citizens to have an account in a bank or similar entity, and to have a minimum knowledge of computer technology. On the other hand, the European Central Bank (ECB) has announced that in no case are coins and banknotes going to disappear, but that it is studying in depth the implementation of the so-called “digital euro”, although it estimates that it would not be implemented until at least. However, the so-called digital euro is neither more nor less than allowing all natural or legal persons residing in a State in the euro zone to have a current account (C/C) in their corresponding central bank, to which From now on, par excellence, we will refer to it as the Bank of Spain (BdE. It must be remembered that currently only credit institutions and official organizations can hold C/Cs in the BdE. For the C/Cs in the BdE for individuals to be completely useful, they should provide them with the same benefits as those now open in credit institutions. This basically involves the direct debit of receipts and payrolls and the withdrawal.

Cash from ATMs or from the cash registers at the entities' offices. An argument in favor of the BdE guarding anyone's funds is that its guarantee is total. However, as the State now effectively guarantees  of deposits, this would not be a substantial incentive to open an L/C at the BdE. On the contrary, on principle it will not allow overdrafts to Australia Phone Number its “clients”, which private banks do. Technologically, the issue of direct debits can be considered resolved, although the BdE would have to make a large investment in material and human resources. As for its cost, it is currently assumed by the issuers of the receipts or orderers of the transfers, so it would not be an obstacle. However, it does not seem that the BdE could now handle thousands of cash withdrawals daily, since it only has 19 offices throughout Spain. It would therefore have to rely on the existing network of ATMs, and there arises the problem of who bears these expenses, which are now assumed by the entities or clients. The digital euro could take away from banks the power they now have as creators of unlimited money A solution could be for the BdE to assume the expenses derived from providing that service, but there are two problems: a) how these amounts would be calculated and b) their impact on the income of the BdE, and therefore of the State.



This solution is not crazy at all, since it is simply assuming that the provision of cash and the collection and payment service are public services, just like health or education, but it would be necessary to see how the entire society would assimilate it. citizenship. Spanish banks have not been particularly bellicose in principle towards the idea of ​​the ECB, but they raise specific objections, because they do not want to lose the business of creating bank money, which represents 90% of what circulates in Spain. They propose setting a limit of 3,000 euros for the amount of money deposited in the BdE or negative interest from a certain amount. The great advantage of the establishment of the digital euro for citizens is, if BdE services were free, up to a reasonable number of movements, financial exclusion could be eradicated. There are no drawbacks because everyone could continue to have CCs in private entities. As for the effect on private credit institutions, it would depend on the level of implementation of the measure in question and the type of people who took advantage of it, so it is not easy to predict. However, in the most extreme case the digital euro could take away from banks the power they now have as unlimited money creators. Taking all of the above into account, it can be concluded that the process of implementing the digital.