The European Central Bank has won backing from the European Council to advance a cap on digital euro holdings. Regulators caution that a widely circulated CBDC could siphon deposits from traditional banks, prompting proposals to constrain the amount citizens can hold so the instrument remains a payments rail rather than a store of value. The move signals a precautionary approach aimed at preserving financial stability while enabling controlled digital currency adoption.

Some observers warn that caps could blunt the digital euro‘s appeal and risk shielding traditional banks from competitive pressure. Supporters say a calibrated cap preserves financial stability while enabling a credible CBDC framework. The outcome will hinge on governance, cap thresholds, and interoperability with existing payment rails.