European Central Bank, or ECB, board member Fabio Panetta has proposed that the central bank should limit the total holdings of a digital euro to prevent the digital currency from being used as a form of investment.
In a speech to the European Parliament’s Economic and Monetary Affairs Committee on Wednesday, Panetta hinted that 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 to discourage residents from HODLing tokens as an investment like crypto assets, with “with larger holdings subject to less attractive rates.”
“Our preliminary analyzes indicate that keeping total euro digital holdings between one trillion and one-trillion-and-a-half euros would avoid negative effects for the financial system and monetary policy,” Panetta said. “This amount would be comparable to the current holdings of banknotes in circulation. With the population of the Eurozone currently around 340 million, this would hold around 3,000 to 4,000 digital euros per capita.
You can watch Executive Board member Fabio Panetta discuss ongoing work on a digital euro at the European Parliament’s Economic and Monetary Affairs Committee @EP_Economy https://t.co/98ggEHbwLg https://t.co/GZxn1ejqMe
— European Central Bank (@ecb) June 15, 2022
Panetta also reiterated that private sector companies should probably coordinate with public authorities for an effective deployment of a digital euro. He previously suggested the importance of the CBDC being accepted in physical and online stores and enabling easy person-to-person payments.
Related: The ECB and the Eurosystem launch experimental prototyping of a digital euro client interface
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 published a working document suggesting that a “CBDC with anonymity” might be a preferable option. compared to traditional digital payments, but many in the EU are still opposed to a digital euro.