The European Central Bank has published technical data responding to a formal request from co-legislators for quantified estimates of how alternative digital euro holding limits could affect financial stability. The analysis covers hypothetical caps up to EUR 3,000 per individual and assesses effects on bank deposits, core liquidity metrics (liquidity coverage ratio and net stable funding ratio), profitability indicators and lending dynamics under both a business-as-usual environment and a highly conservative flight-to-safety scenario. Across the modelling, payment digitalisation is estimated to generate a EUR 127 billion deposit inflow by 2034 (1.5% of retail sight deposits), which, on aggregate, exceeds estimated digital euro outflows under the business-as-usual scenario for holding limits up to EUR 3,000. In the flight-to-safety scenario, aggregate retail sight-deposit outflows rise from EUR 156 billion at a EUR 500 limit (1.8% of retail sight deposits) to EUR 699 billion at a EUR 3,000 limit (8.2% of retail sight deposits), while aggregate liquidity metrics remain above 100%; at a EUR 3,000 cap, 13 banks (0.3% of sector assets) reach a 100% LCR and nine banks (0.1% of sector assets) are identified as at risk of dipping below 100% due to insufficient eligible non-HQLA collateral for standard central bank operations. Profitability impacts are also presented as contained in the business-as-usual scenario, including an estimated 9–18 basis point decline in net interest income for EUR 500–3,000 limits when not accounting for the digitalisation trend, with country-level return on equity contraction generally not exceeding 40 basis points except for one outlier; small market lenders, retail lenders and diversified lenders are among the more affected business models. The ECB emphasises that the note is a technical response to the co-legislators’ specific request and does not represent the outcome of its full holding-limit calibration process or its position on an appropriate holding limit level; some requests could not be fully met due to data limitations and the risk of identifying individual institutions.
European Central Bank 2025-10-10
European Central Bank publishes technical analysis of financial stability impacts of digital euro holding limits up to EUR 3,000
The European Central Bank's data estimates the impact of digital euro holding limits on financial stability, assessing scenarios with caps up to EUR 3,000. Payment digitalisation could lead to a EUR 127 billion deposit inflow by 2034, exceeding digital euro outflows under normal conditions. In a flight-to-safety scenario, retail sight-deposit outflows could rise significantly, but liquidity metrics remain above 100%, with some banks potentially at risk due to collateral insufficiencies.