Fabio Panetta, an executive board member of the European Central Bank, or ECB, proposed the central bank limit the total holdings of a digital euro in an effort to prevent the digital currency from being used as a form of investment.
In a Wednesday speech for the Committee on Economic and Monetary Affairs of the European Parliament, Panetta hinted the ECB could cap the number of digital euros between 1 and 1.5 trillion tokens. The proposed limit would be part of an effort aiming to disincentivize residents from HODLing tokens as an investment like crypto assets, with “with larger holdings subject to less attractive rates.”
“Our preliminary analyses indicate that keeping total digital euro holdings between one trillion and one and a half trillion euro would avoid negative effects for the financial system and monetary policy,” said Panetta. “This amount would be comparable with the current holdings of banknotes in circulation. As the population of the euro area is currently around 340 million, this would allow for holdings of around 3,000 to 4,000 digital euro per capita.”
You can watch Executive Board member Fabio Panetta discussing the ongoing work on a digital euro at the European Parliament’s Committee on Economic and Monetary Affairs @EP_Economics https://t.co/98ggEHbwLg https://t.co/GZxn1ejqMe
— European Central Bank (@ecb) June 15, 2022
Panetta also reiterated that companies in the private sector would likely need to coordinate with public officials for an effective rollout of a digital euro. He has previously suggested the importance of the CBDC being accepted in both physical and online stores and allowing easy person-to-person payments.
The ECB announced in July 2021 that it had launched a two-year investigation phase for the CBDC, with a possible release in 2026. In May, the central bank released a working paper suggesting that a “CBDC with anonymity” may be a preferable option when compared with traditional digital payments, but many in the EU are still opposed to a digital euro.