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

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 euro 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 central bank digital currency (CBDC). He elaborated: “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.” Watch again: Executive Board member Fabio Panetta speaks at the @Europarl_EN Committee on Economic and Monetary Affairs about why we need a digital euro. pic.twitter.com/2xxqCkrEUg — European Central Bank (@ecb) June 17, 2022 ECB to Discourage Large Investments in its Digital Currency A digital euro, if poorly conceived, may replace an excess...