UniCredit CEO says has 'relatively constructive' approach to digital euro

UniCredit CEO Andrea Orcel warned that the introduction of a digital euro would siphon off a portion of retail deposits — the cheapest source of bank funding — thereby weakening banks' liquidity and compressing profit margins. If a digital euro attracts significant deposits away from commercial banks, European banking sector funding costs and margin pressure could rise materially.

Analysis

UniCredit CEO Andrea Orcel warned that the introduction of a digital euro would siphon off a portion of retail deposits — the cheapest source of bank funding — thereby weakening banks' liquidity and compressing profit margins. If a digital euro attracts significant deposits away from commercial banks, European banking sector funding costs and margin pressure could rise materially.