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    The use of digital euros as a form of investment may be avoided, according to an ECB official.

    The European Central Bank (ECB), the central bank of the European Union, is advancing discussions on the digital euro project, but decision-makers argue that is possible to fit the central bank digital currency (CBDC) with effective tools that would prevent it from being used as a form of investment – rather, it would only be used as a means of payment, according to Fabio Panetta, Member of the Executive Board of the ECB.

    The banker said in his remarks to the Committee on Economic and Monetary Affairs of the European Parliament, the EU’s legislative, that “one such tool entails quantitative limits on individual holdings.”

    Yet another one, said Panetta, “involves discouraging its use as a form of investment by applying disincentivising remuneration above a certain threshold, with larger holdings subject to less attractive rates.”

    Panetta said that the bank’s intention is to embed both types of tools, limits and tiered remuneration, in the digital euro’s design, adding:

    “Closer to the possible introduction of a digital euro, we will decide how to combine and calibrate them to preserve financial stability and our monetary policy stance and transmission.”

    The ECB’s preliminary analyses show that keeping total digital euro holdings between EUR 1trn (USD 1.04trn) and EUR 1.5trn (USD 1.56trn) would allow the avoidance of negative effects on the EU’s financial system and monetary policy, according to Panetta.

    “This amount would be comparable with the current holdings of banknotes in circulation,” the banker told EU lawmakers. The population of the euro area is around 340m, which means that “this would allow for holdings of around 3,000 to 4,000 digital euro per capita.”

    Panetta further argued that,

    “At the same time, when designing the tools, we will aim for simplicity, in terms of both technical implementation and user experience. We want to provide people with a product that is easy to understand and easy to use.”

    The latest remarks come as the EU’s institutions continue their work on the proposed Markets in Crypto-assets (MiCA) Regulation that is to provide a legal framework for cryptoasset markets for the bloc’s 27 member states. 

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