ECB gains backing from Council of EU for holding limits on digital euro

The Council of the European Union has endorsed the European Central Bank's (ECB) plan for a digital euro, viewing it as an evolution of money and a tool for financial inclusion. However, the Council stipulated that the ECB must impose limits on the total value citizens can hold in digital euro accounts to ensure it functions purely as a payment instrument and not as a store of value, thereby safeguarding financial stability. Experts suggest these limits are crucial to prevent large-scale deposit outflows from commercial banks to the ECB, which could constrain credit creation and accelerate bank runs during times of stress. While the ECB frames this as a stability measure, critics argue the caps also serve to shield incumbent banks from competition by preserving their access to cheap funding from customer deposits.

(Source：CoinDesk)