I heard stories about banks (mostly the app ones) closing accounts for "no reason" (there is always a reason and it's mostly quite simple), but I haven't heard stories about accounts being refused to be opened or clsoed for not having a digital id. And double so for this happening because the government put them on a list.

The government of course can put you on the list, but they don't need digital id for that. They pass a law, the regulator sends the list to all the banks and boom, you are blocked. I guess we should not have banks or not have the government too.