Digital Euro May Have Transaction Limits for Retail Users

With the European Central Bank (ECB) now developing the prototype for its Central Bank Digital Currency (CBDC) otherwise known as the Digital Euro, more details are now surfacing based on its potential operational dynamics.


Speaking recently at the “Towards a legislative framework enabling a digital euro” conference hosted by the European Commission (EC), Fabio Panetta, a board member of the ECB said the bank may impose some restrictive limits on transactions for the retail individual users.

While Panetta acknowledged that the ECB has not made any final decision on what the limit will be, he said €3,000 is a good example of a limit the bank can impose on the Digital Euro as a store of value. He went on to say that the total number of transactions that can be done by individuals may also be capped at 1,000 per month.

“If we give access to a means of payment, which is relatively limited, there are no transaction costs because you only need to have a smartphone,” Panetta said, “There will be risks that people could use this possibility to move, for example, their deposits of other banks or their money out of financial intermediates.” 

The ECB board member also highlighted on an important subject regarding the Digital Euro and how it will co-exist with fiat. According to him, both versions of the Euro will complement each other to make for a robust financial ecosystem within the bloc.

“Digital euro would be an additional option for retail payment — not a challenge to the function of the financial system,” he said confirming that the new money is not designed to replace cash, a position that echoes similar words from ECB President Christine Lagarde.

Other Central Banks have maintained this position, noting that their CBDC will not displace cash nor make them obsolete. This argument brings a lot of doubt considering the wide embrace of people to the digital economy and the financial evolution which has largely relegated cash in some countries.

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Introducing Digital Euro to Protect Monetary Sovereignty amid Cashless Tendency: Lagarde

Christine Lagarde, the President of the European Central Bank, and Fabio Panetta, a member of the ECB’s Executive Board, have shared their thoughts on the need for the digital Euro amidst the waning influence of fiat cash.


In a blog post, Lagarde and Panetta identified three major avenues through which the Euro as paper money is no longer in vogue, noting that if left unaddressed, it could affect the overall relevance of the financial landscape of the European Union. As a part of the disruptive financial landscape identified, paper money is now being used relatively less with digital payments offered by the private sector taking centre stage.

Lagarde and Panetta noted that the dependence on private digital payments outfits is risky as private institutions cannot effectively replicate the roles of the central bank. While discrediting traditional private money service firms that their roles will bring in confusion, they noted that stablecoins on the other hand are “vulnerable to runs.”

Another fear the two pointed out is the fact that permitting private payments to dominate can invite non-European solutions and technologies to dominate the EU payment landscape.

Presenting the Digital Euro as the Solution

Lagarde and Panetta, in their submission, posited that only the Digital Euro, a complement to Fiat Euro, can wade off the current threats that are described above.

They pointed out that while the ECB is still working on the design concepts for the Digital Euro – projected to be completed in 2023 – there is a consensus to build the new legal tender, bearing in mind what consumers cherish the most, including “wide acceptance, ease of use, low costs, high speed, security, and consumer protection.”

“Introducing a digital euro would ensure that citizens can continue to trust in the monetary anchor behind their digital payments. It would protect the strategic autonomy of European payments and monetary sovereignty, providing a fall-back solution if geopolitical tensions intensify,” the blog post reads.

The EU is ahead of the curve when it comes to providing a detailed regulatory framework for its emerging crypto and virtual assets industry. While it is looking to promote innovation, it is also not sitting on its oars as it looks to present its CBDC as the dominant payment model in the near future.

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ECB Officials Urges to Accept Digital Euro in Brick-and-Mortar Stores

Fabio Panetta, a member of the Executive Council of the European Central Bank (ECB), suggested an acceptance of the digital euro in brick-and-mortar stores and online entities to help promote the use of the fiat digital euro.

A digital euro needs to allow easy payments between people if it follows a trend of adoption like the fiat euro 20 years ago. A nominal survey showed in a statement released on Wednesday. And the masses are more receptive to the digital euro, which is widely accepted in various brick-and-mortar and online stores.

Panetta said:

“The introduction of euro banknotes made it possible for us to pay with physical euros anywhere in the euro area. So it is no surprise that people expect to be able to use the digital complement to banknotes wherever they can pay digitally or online.”

In April last year, The European Central Bank (ECB) has published its public consultation results, an initiative launched last year to evaluate Europeans’ stance regarding a central bank digital currency (CBDC) backed by the European Union.

The majority of the respondents, including private citizens and professionals, want a digital Euro, but only if it can be built with elements of privacy.

Fabio Panetta said the ECB would hold another round of focus groups on the digital euro by the end of 2022, adding that:

“We are getting a clearer picture of what citizens and merchants want, so we can finetune all the design features of a digital euro before any potential issuance. And co-legislators have a key role to play, for instance to enable greater privacy.”

The ECB is amongst the major monetary watchdogs with a vested interest in the Digital Euro pursuit. The ECB President Christine Lagarde has often reiterated the bank’s plans to launch the CBDC to serve as a complementary digital payment alternative to relieve the existing fiat Euro alternative.

Other economies, including Japan, China, and Sweden, are also exploring the Digital Currency initiative across the board.

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European Central Bank announces digital euro advisory group members

The European Central Bank (ECB) has announced the formation of a Market Advisory Group for the purpose of exploring the infrastructural and circulation potential of the digital euro from the perspective of industry spearheads.

The group also aims to uncover the digital euros optimal function within the pan-European currency’s vast payments ecosystem. 

The group includes a number of well-established experts from the banking and financial sector, including Aleksander Kurtevski, managing director of Bankart, Antonio Macías Vecino, head of payments discipline at BBVA and Axel Schaefer, payment regulation and innovation specialist at Ingka Group (Ikea), among others.

It is expected that initial consultation meetings will commence in November 2021 and will operate on a monthly basis. The 30 members will work in advisory roles and report their findings for consideration in retail payments discussions within the Euro Retail Payments Board (ERPB).

In mid July this year, the Governing Council of the ECB disclosed plans to commence a two-year preliminary research initiative into the feasibility of the digital euro project, assessing parameters such as infrastructure creation, distribution and design, with an assured intention to “complement cash, not replace it.”

Related: Stablecoins are assets — not currencies, says ECB president

ECB Board Member Fabio Panetta expressed his high-expectations for the project’s success:

“I am pleased that many high-quality experts from the private sector are willing to contribute to the digital euro project. Their expertise will facilitate the integration of prospective users’ and distributors’ views on a digital euro during the investigation phase.”

This is a developing story, so more detail will be added shortly.