The number of financial institutions in Germany is steadily declining which is causing a dramatic turmoil in the country’s financial environment. According to recent data banks reduced their branch network by an extra 6% last year displaying the continued effects of digitization on the conventional banking industry . This change has an impact on the availability of actual currency in addition to how clients execute their financial transactions.
European Central Bank’s Digital Euro Project Faces Cryptocurrency Competition
The European Central Bank (ECB) has been striving to create a digital version of the euro as consumers embrace internet banking more and more and cryptocurrencies have grown increasingly well-known . Even if there might not be much interest in another digital currency among Germans right now the ECB’s idea seems inevitable. Consumers won’t be able to access a digital euro for several more years which will allow cryptocurrencies to continue their meteoric ascent.
Like Wall Street Memes new cryptocurrencies rapidly react to market movements and draw investors. The introduction of central bank digital currencies (CBDCs) on the other hand is frequently subject to lengthy delays . Regarding the competition these CBDCs will face from well-established cryptocurrencies several analysts express pessimism.
Impact on Cash Supply and Concerns for Accessibility
Consumers are under growing pressure to accept cashless purchases especially during the COVID-19 pandemic when using cash was discouraged. As a result one out of every ten banks in Germany is anticipated to shut down in 2021 with another 6% closing the year before.
This development has effects on the accessibility of actual money . The demand for people to visit bank branches has decreased as a result of the continuous digitalization of financial services and the advent of cryptocurrencies . Banks have been reorganizing their physical sales infrastructure to cut expenses which has led to branch closures.