The chief executive of major European bank UniCredit warned Monday that a planned digital version of the euro currency could squeeze bank profits by pulling away customer deposits that provide low-cost funding.
Andrea Orcel made the comments during a Morgan Stanley conference held in London, where he discussed his bank’s ongoing discussions with European Central Bank officials about the digital currency project.
According to Orcel, UniCredit is working closely with the ECB to help ensure the central bank can achieve its monetary policy objectives through the digital euro while avoiding excessive harm to traditional banking operations.
When asked about his bank’s stance on the digital euro initiative, Orcel responded that UniCredit maintains a collaborative outlook.
“We’re relatively constructive,” Orcel said during his conference remarks.
The banking executive explained that retail customer deposits represent banks’ most affordable funding source, and the digital euro could redirect some of those funds away from traditional bank accounts, potentially affecting both liquidity levels and profit margins across the banking sector.
