Morgan Stanley has found that financial institutions might lose up to 8% of customer deposits due to a digital euro, Reuters reports. However, the bank's analysts note that the estimation is based on "bear case" scenario, according to which, all euro area citizens above the age of 15 transferred ~$3,637 into an ECB-regulated digital wallet.
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"This could theoretically reduce euro area total deposits, defined as households' and non financial corporations' deposits, by 873 billion euros, or 8%," the analysts wrote in a report.
At the same time, Morgan Stanley admits that banks in smaller countries, like Latvia or Greece, could be impacted harder than the average. Earlier in April, the European Central Bank (ECB) published a report of its public consultation on a digital euro.
The financial regulator found out that the majority of respondents wants from such a digital currency privacy (43%), security (18%), the ability to pay across the euro area (11%), no additional costs (9%) and offline usability (8%).
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