The EU Council supports the ECB’s digital euro plan as a payments-focused tool for financial inclusion, proposing holding caps to safeguard banks and financial stability against deposit flight risks.
The Council of the European Union has backed the European Central Bank’s initiative to develop a digital euro, framing it as an evolution of money aimed at enhancing financial inclusion. The Council recommended strict limits on how much value individuals can store in digital euro accounts or wallets to prevent it from acting as a store of value. Officials argue the caps would protect banks from sudden deposit outflows and maintain financial stability, while critics say they also shield banks from competition and reduce the currency’s potential usefulness. ECB concerns mirror its warnings about stablecoins displacing retail deposits. Supporters view the design as necessary to preserve credit creation and monetary policy transmission, while opponents see it as limiting innovation and consumer choice.