The Digital Euro: Why the Holding Limit Decides the Deposit Base of Banks

The digital euro has cleared its last major parliamentary hurdle. On 23 June 2026, the Economic and Monetary Affairs Committee (ECON) of the European Parliament adopted the legal framework by 43 votes to 14 with one abstention and secured the mandate for negotiations with the Council. Formal confirmation in plenary followed in early July; the actual trilogue negotiations begin after the summer break, with the aim of an agreement by the end of the year. The path to digital central bank money is thus wide open. The question that decides its effect on banks, however, has been deliberately left open in the legal text.

That question is the holding limit. It sets the maximum amount of digital central bank money a private individual may hold. The ECON text fixes no concrete figure; the overall limit is to be set later by the European Commission through an delegated act on a recommendation of the European Central Bank (ECB), and reviewed at least every two years. It is precisely this calibration that holds the economic core, because it determines how much deposit volume is potentially withdrawn from commercial banks.

What the committee decided

The ECON text stakes out the framework without naming the most sensitive figure. It is fixed that the digital euro will not bear interest and that businesses may only hold incoming payments in digital central bank money for up to 24 hours before forwarding them to a bank account. The design provides for two variants: an account-based online version and an offline version whose privacy is modelled on cash, so that the loss of the device equals the loss of cash. The Parliament's rapporteur, Fernando Navarrete Rojas, framed the project clearly.

The ECB frames the project in monetary and geopolitical terms: as a response to the dominance of US dollar stablecoins and to the dependence of European payments on Visa and Mastercard, which together process around 61 per cent of card payments in the euro area. For banks, this framing is secondary. They see the balance sheet first.

Why the holding limit is a treasury question

The commercial significance of the digital euro lies in a seemingly technical property: it bears no interest, but is available at any time and free of default risk, because it is a direct claim on the central bank. That makes it a liquidity lever. In calm times the incentive to shift money from an interest-bearing or at least familiar bank account into non-interest-bearing central bank money may be small. In stress phases the picture reverses: when the safety of the deposit is in doubt, digital central bank money becomes the preferred haven. The holding limit is therefore not just a matter of convenience but a cap on the speed at which deposits can drain away in a crisis.

For a bank's treasury function this shifts the calculation. Part of what was previously regarded as stable sight deposits becomes potentially more volatile, because it faces an always-available, risk-free alternative. How large that part is depends directly on the calibration of the limit.

The calibration: from 500 to 3,000 euros

Two orders of magnitude are mainly under discussion. In its studies the ECB uses a reference value of 3,000 euros per person; critics from the banking sector favour a much lower limit of 500 euros. The difference is not a nuance but decides over hundreds of billions of euros of potential deposit outflow.

The figures demonstrate two things. First, the order of magnitude is real: even in the moderate scenario a three-digit billion figure is at stake. Second, the effect is unevenly distributed. Smaller institutions with a narrower funding base feel a proportionally higher outflow than large, broadly funded houses. A blanket view of the sector conceals this gradient.

Two rationalities talking past each other

At its core, the dispute over the limit is a collision of two logics. The ECB argues in macroeconomic and geopolitical terms: Europe needs a sovereign, public means of payment that does not depend on private US providers or dollar stablecoins, and the digital euro must expressly not become a store of value, which is why it remains non-interest-bearing and capped. The banks argue microeconomically: every euro that migrates into digital central bank money is missing from funding and makes lending more expensive. Both positions are internally coherent, but they measure different things. The art of the trilogue negotiation lies in finding a limit that secures the ECB's political sovereignty without structurally weakening the banks' funding.

The second front: the compensation model

Anyone narrowing the dispute to the holding limit alone overlooks the second line of conflict. The German Banking Association (Bundesverband deutscher Banken, BdB) pointed out, alongside the ECON vote, that the remuneration for the banks distributing the digital euro and providing the infrastructure is an equally important success factor. The institutions bear costs for distribution, onboarding and operation, but receive no interest margin for a non-interest-bearing product. Without a viable compensation model, the digital euro risks becoming a pure cost position for the banks. At the same time, the BdB warns against an overloaded range of functions that makes implementation more expensive and delays the start.

Recommendations for operational practice

For treasury, risk and strategy functions, the digital euro is not yet a product but already a planning variable. Five fields of action stand out.