Euro area finance ministers are testing the contours of a retail “digital euro”, focusing on how strict to make limits on individual holdings and how decisions over the currency’s governance should be taken.
At their meeting on 19 September 2025, ministers were invited to give “political guidance on the institutional framework for setting the ceiling for the holding limits and for the final issuance of the digital euro”, alongside an update on the Council’s work on the legislative package.
What is on the table
The European Commission’s June 2023 proposal for a regulation on the digital euro would make the European Central Bank (ECB) responsible for devising tools to limit use of the instrument as a store of value. That includes the option of caps on how much any individual can hold, and other mechanisms, with parameters later set or calibrated in secondary acts.
The ECB, which moved from an investigation to a preparation phase in late 2023, reported in June 2024 that it had started work on a methodology to calibrate holding limits. It also set out a timeline in which the Governing Council expects by end-2025 to decide whether to proceed to the next phase of preparations; any eventual issuance decision would come later.
Why holding caps matter
A cap is seen by central bankers as a key safeguard to prevent large outflows from bank deposits into risk-free central bank money, particularly in periods of market stress. ECB analysis has suggested that a per-person cap of around €3,000 would materially limit liquidity risks for banks while supporting take-up for payments use. External research and commentary have described a plausible range between €3,000 and €4,000.
The European Parliament’s research service has flagged the operational corollary: enforcing any pan-euro area cap would require a technical arrangement capable of checking an individual’s aggregate holdings across different payment service providers, while respecting privacy and data-minimisation requirements. A “single access point” for user identifiers and limits has been one mooted approach in the legislative analysis.
The governance question
Ministers are also considering who should set, adjust or suspend holding limits over time, and with what safeguards. The issue sits at the intersection of central bank independence and the role of the EU’s co-legislators. The Commission proposal assigns to the ECB the development of instruments to limit store-of-value use, while the legal framework — adopted by Parliament and Council — would frame the boundaries and objectives for such tools.
Recent discussion has highlighted the need for clear rules that would make it difficult to loosen caps during a crisis in ways that might destabilise bank funding. According to reporting on ministerial deliberations, officials have underlined that governance should constrain pro-cyclical adjustments to limits in periods of stress.
Model and distribution
The Eurosystem’s preferred design remains an intermediated model: the ECB would provide the core infrastructure and settle digital euro balances, while banks and payment institutions would handle customer-facing services. The project foresees both online and offline functionality, with “high privacy standards” for day-to-day transactions, and a remuneration approach consistent with discouraging hoarding. Technical work on each of these aspects is proceeding in the preparation phase.
Legislative path and timing
The Council and European Parliament are working through the digital euro package in parallel with a proposal safeguarding cash’s status as legal tender. Eurogroup discussions earlier this year set the context, with ministers tracking broader developments in digital money and crypto-asset markets.
The ECB has stressed that no decision has been taken to issue a digital euro. By end-2025 the Governing Council expects to decide whether to move deeper into preparations; an issuance decision would depend on the final legal framework, technical readiness, and an assessment of costs and benefits.
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