Individual users may see low transaction and storage thresholds for the digital euro, the European Union’s potential central bank digital currency.
The European Union’s central bank digital currency (CBDC) may have transaction and store-of-value limits for individuals, according to Fabio Panetta, an executive board member of the European Central Bank (ECB), at the European Commission’s “Towards a legislative framework enabling a digital euro” conference.
Exact limits are not set in stone, as the ECB is still investigating the digital euro project, but Panetta mentioned €3,000 as an example store-of-value limit and 1,000 transactions as a monthly limit.
“If we give access to a relatively limited means of payment, there are no transaction costs because all you need is a smartphone,” Panetta explained. “There will be risks that people will use this possibility to move, for example, their deposits at other banks or their money out of financial intermediaries.”
This would pose a risk to financial stability in times of crisis, he added, which is why the ECB is considering imposing transaction limits on the potential CBDC.
“Digital euro would be an additional retail payment option — not a threat to the function of the financial system,” Panetta said, emphasizing that the CBDC is not intended to replace cash.
Panetta also mentioned a €50 transaction limit, citing anti-money laundering provisions.
However, German Finance Minister Christian Lindner expressed reservations. “I wonder whether people would accept €50 when they can pay hundreds and hundreds of euros in cash,” he said, adding, “We should introduce a digital euro that is truly accepted by people, not just policymakers.”
Countries like Nigeria that have already introduced digital versions of their currencies are struggling to find enthusiasm among the users.
By September 2023, the ECB is expected to decide whether to proceed with a realization phase. The continuation of the European CBDC project is becoming more likely, with a legislative proposal from the European Commission expected.
Meanwhile, Bitcoiners prefer a 21 million cap on Bitcoin.