According to ECB Board Member Fabio Panetta, the European Central Bank (ECB) aims to limit digital euro ownership due to financial stability concerns. According to the source, the goal is to have a maximum amount of digital cash in circulation equivalent to that of <a href="https://www.cryptoknowmics.com/news/circle-to-launch-stablecoin-eurocoin-on-30th-june/" target="_blank" rel="noopener">euro</a> banknotes today. The Central Bank of the Eurozone intends to keep total digital euro holdings below 1.5 trillion euros.

In a statement to the European Parliament's Committee on Economic and Monetary Affairs, member of the ECB's Executive Board Fabio Panetta warned that a digital euro might lead to the conversion of a considerable share of bank deposits in the euro area into digital cash (ECON).

Deposits are the key funding source for euro area banks, according to Panetta, who added that the authority is closely monitoring the financial and monetary risks connected with adopting a <a href="https://www.federalreserve.gov/faqs/what-is-a-central-bank-digital-currency.htm" target="_blank" rel="nofollow noopener">central bank digital currency</a> (CBDC). He elaborated:
<blockquote><em>"A digital euro could substitute an excessive amount of these deposits if not well designed. Banks can respond to these outflows, managing the trade-off between funding cost and liquidity risk."</em></blockquote>
https://twitter.com/ecb/status/1537792333722357761
<h2>ECB to Discourage Large Investments in its Digital Currency</h2>
A digital euro, if poorly conceived, may replace an excessive amount of these deposits. Banks can respond to these outflows by balancing the cost of funding against the risk of liquidity. The European Central Bank (ECB) wants to discourage significant investments in its digital currency. Meanwhile, according to Panetta, the ECB may discourage digital cash investments by "disincentivizing remuneration above a particular threshold, with greater holdings subject to less attractive rates." The bank has yet to decide how the two measures would be combined.

The monetary authority would seek a gradual acceptance of the CBDC to meet its goals in this regard, Panetta said, estimating it will take several years before most Europeans own the digital euro. To "prevent confusion about what digital money is," Fabio Panetta also requested that the European Central Bank create its digital currency.

Fabio Panetta: European Central Bank Aims to Limit Digital Euro Holdings

The European Central Bank (ECB) aims to limit digital euro ownership due to financial stability concerns to have digital cash equivalent to euro banknotes.

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Fabio Panetta: European Central Bank Aims to Limit Digital Euro Holdings

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