ECB Secures EU Council Support for Setting Limit on Holdings of Digital Euro

The European Central Bank (ECB) has secured the support of the EU Council regarding the setting of a holding limit for the digital euro.

On the 23rd (local time), according to virtual asset (cryptocurrency) specialist media CoinDesk, the EU Council expressed support for the introduction of the digital euro itself while stressing that, for financial system stability, there should be a cap on the total amount of digital euro an individual can hold.

The Council made clear that a limit is particularly needed on the combined amount of digital euro that can be held simultaneously in online accounts and digital wallets. This is interpreted as a measure to prevent large outflows of bank deposits and to protect existing financial intermediation functions.

The ECB has maintained that the digital euro should function as a digital complement to cash and that it is undesirable for it to be used excessively as a deposit substitute. Setting a holding limit is a mechanism to institutionally reflect this policy stance.

The specific level of the holding limit for the digital euro has not been decided and will be determined through the legislative process and technical review going forward. In addition to the holding limit, the ECB is discussing key issues such as the level of anonymity, offline payment functionality, and the division of roles with commercial banks.

The digital euro can only be officially launched once EU-level legislation is completed. The EU Council's support is seen as a sign that discussions on the introduction of the digital euro are entering an institutional stage.