Economics
A place to talk about finance and the economy
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ON COMPETITION FOR DEPOSITS AND WHY BANKS HATE STABLECOINS
In the ECB's latest paper "Technical data on the financial stability impact of the digital euro", as per request of European Parliament, ECB responses how Digital Euro will affect the stability of the financial system.
While stablecoins are not part of this paper, the root cause is the same. Competition for deposits. Currently, banks are underpaying depositors and are afraid of competition - if consumers and especially businesses start to use better non-bank money, they will bypass the banking system unless banks begin to pay competitive interest rates for deposits. This is so-called "sticky deposits" and for banks, the best deposits, because due to the banking system structure, it is very difficult for a consumer to switch their main bank, plus banks themselves rarely compete with attractive interest rates.
This is discussed at the end of the report "Impact on profitability". They put it politely:
More specifically, the assessed effect on NII captures the possible changes in interest income and expense mainly due to changes in banks’ balance sheets in response to deposit outflows towards the digital euro. The considered effect on banks’ NII in this analysis stems from changes in volumes as well as price adjustments considered in the balance sheet optimisation model. It is important to recall that the optimisation model does not consider that banks could increase deposit remuneration to limit possible deposit outflows.
https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.deprep251010_technical_annex_financial_stability_impact_digital_euro.en.pdf 1 reply
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New research from Anthropic’s Economic Index, using one million real Claude. ai conversations, just revealed who’s actually tapping the power of large language models and it’s not just coders.
37% of prompts come from computer & mathematical jobs—but look closer, and you’ll find copywriters, editors, educators, scientists, and business pros all finding ways to accelerate, create, and problem-solve with AI.
This chart breaks it down, using task-level mapping across 20,000 categories in O*NET. Why? Because AI is now used for everything from debugging code to drafting essays, tutoring, editing, and running statistical analyses. 0 reply
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