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The Impact of Digital Euro on the German Banking Industry

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It is reported that a survey by the Federal Association of German Community Banks (BVR) found that the introduction of digital euro may have devastating consequ

The Impact of Digital Euro on the German Banking Industry

It is reported that a survey by the Federal Association of German Community Banks (BVR) found that the introduction of digital euro may have devastating consequences for the German banking industry. According to the survey, if each person converted 3000 euros into CBDC, only 56 of 714 institutions could meet the liquidity buffer required by law. This means that banks will have to find alternative and more expensive sources of funds.

Federal Association of German Community Banks: Digital Euro is dangerous for small banks

Analysis based on this information:


The announcement of a possible introduction of digital euro has caused concern among the German banking industry. According to a survey by the Federal Association of German Community Banks (BVR), the impact of such an introduction could have devastating consequences, specifically regarding the liquidity buffer required by law.

The survey found that if each person converted 3000 euros into CBDC (central bank digital currency), only 56 of the 714 institutions could meet the liquidity buffer requirements. This would mean that the vast majority of banks would have to find alternative and likely more expensive sources of funds.

This finding is significant because currently, the German banking industry relies heavily on deposits as a source of funds. The introduction of digital euro could change this by allowing customers to directly hold their funds with the central bank, bypassing the need for commercial banks to hold deposits. In turn, this would reduce the amount of funds that banks have available for lending and other activities, ultimately impacting their profitability.

However, it is important to note that this survey only represents the perspective of German community banks and may not be indicative of the broader banking industry. Additionally, the introduction of digital euro may have other benefits, such as increased financial inclusion and reduced transaction costs.

One possible solution to mitigate the potential negative impact on banks could be for regulators to adjust the liquidity buffer requirements to account for the introduction of digital euro. This could involve reducing the required amount of liquid assets that banks are required to hold, which would enable them to adapt to the changing financial landscape.

Overall, the introduction of digital euro is a complex issue that requires careful consideration of both the potential benefits and drawbacks. While it may have detrimental consequences for the German banking industry, it could also potentially bring about positive changes in the financial system.

In conclusion, the impact of digital euro on the German banking industry is a topic that requires further analysis and discussion. The survey by the Federal Association of German Community Banks sheds light on some of the potential challenges, but it is important to consider a range of perspectives and solutions for this issue.

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