The European Central Bank (ECB) has secured political backing from the Council of the European Union for limits on how much digital euro individuals and businesses would be allowed to hold, a key step in shaping the future of a potential central bank digital currency (CBDC) for the eurozone.
Support from EU member states strengthens the ECB’s long-standing position that caps are essential to prevent the digital euro from destabilising the banking system. Policymakers fear that unlimited holdings could trigger large-scale shifts of deposits from commercial banks into central bank money, especially during periods of financial stress.
Under the proposal, the digital euro would function primarily as a means of payment rather than a store of value. Holding limits, potentially ranging between a few thousand euros per user, would be enforced through technical controls embedded in wallets and payment infrastructure. The ECB argues this would preserve the role of banks in credit creation while still giving citizens access to public digital money.
The Council’s backing comes as negotiations continue between EU institutions on the legal framework for a digital euro. While the European Parliament has raised concerns about privacy, surveillance, and user autonomy, the Council has largely aligned with the ECB on safeguards designed to protect financial stability.
ECB officials have consistently framed the digital euro as a complement to cash, not a replacement. By capping holdings, the central bank aims to avoid making the digital euro attractive as a savings vehicle, especially in times of market panic when consumers might otherwise move funds en masse out of banks.
The proposal also reflects broader geopolitical considerations. With stablecoins and foreign CBDCs gaining traction globally, EU policymakers see the digital euro as a strategic tool to protect monetary sovereignty, ensure resilience in payments, and reduce dependence on non-European financial infrastructure.
Despite the growing political support, the digital euro is still not a done deal. Final approval will depend on legislation agreed by the Parliament and Council, as well as further technical testing by the ECB. A decision on whether to formally issue the digital euro is not expected before 2026.
If adopted, the capped-holding model would place the eurozone among jurisdictions pursuing a cautious, bank-friendly approach to CBDCs, prioritising stability over disruption as digital money moves closer to reality.
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