MNI BRIEF: Digital Euro 3K Limit, Little Stability Risk - ECB

A digital euro with a holding limit of up to EUR 3,000 would have a limited impact on bank deposits, liquidity and profitability, according to a technical analysis prepared in response to a request from EU co-legislators, the European Central Bank said Friday.

The report, a non-binding staff technical presentation, assessed potential effects under both “business-as-usual” and “flight-to-safety” scenarios, concluded that even under normal stress, deposit outflows would remain manageable for the euro area banking system. Under normal conditions, the ECB estimates that deposit outflows would be modest, while in a severe stress scenario — assuming all users hold the maximum amount allowed — withdrawals could reach a maximum of EUR 699 billion, or 8.2% of total retail sight deposits. (see MNI INTERVIEW: Digital Euro Risks Failure-Ex Bank Of Spain Gov )

However, the analysis found that liquidity and funding metrics, such as the liquidity coverage ratio and the net stable funding ratio, would stay well above regulatory minimums, confirming banks’ resilience.

The ECB added that the impact on bank profitability would be minimal, with net interest income declining by no more than 18 basis points under the highest holding limit scenario, noting carefully calibrated holding limits would safeguard financial stability and monetary policy transmission, while also helping to prevent larger, uncontrolled outflows towards other digital assets such as stablecoins.