You thought cryptocurrencies were disruptive? Wholesale adoption of digital euros issued by the European Central Bank could force it to step in to bolster banks in an extreme scenario wargamed by analysts at Mediobanca.
Managing retail flows of money has historically been fiddly. Central bankers largely outsourced the job to banks owned by stockholders. As the use of cash declines and technology advances, digital currencies could enable central banks to dispense with some of these middlemen.
The EU would be more likely to press ahead with a digital euro, which it is in the early stages of considering, for strategic reasons. One of these would be to challenge what a French politician described as the US dollar’s “exorbitant privilege”. Another would be to forestall substitution of euros by cryptocurrencies or rival central bank digital currencies (CBDCs).