On the 3000 euro digital euro holding limit, two things. First, you can use the reverse waterfall functionality if you link your digital euro wallet to a bank account: any payment beyond the value of your wallet (whether up to the holding limit or beyond is unclear to me) is automatically liquidated using funds from your account. You can have a digital euro wallet without a link to a bank account, but in that case you can do payments only up to the holding limit (which could be higher for this type of wallet). Second, as for firms, they cannot hold digital euros and must have their payment system linked to a bank account. They can accept a digital euro payment, which will be immediately converted to funds in its bank account. Check this document for details:
This means you can use the digital euro for five things that you can only do efficiently today with at least five instruments: transfer money instantaneously at no cost across European countries (you can do this today if the payer and the payee have an account in certain banks, like Revolut, for example); transfer money instantaneously within a country in the Eurozone (all EZ countries have systems for this but they do not work outside each country); make local payments with a digital instrument (you need a debit card and in any case a bank account); buy online (you need a credit card or things like PayPal, which in general also require one); make offline person-to-person payments (you need cash). The digital euro allows you to perform these five tasks with a single instrument.
gosh, you're good at this. thanks so much! best, swk
joke? swk?
Hanno exposed the Plumbers’ Crack :)
Revealing insights. https://www.hoover.org/sites/default/files/2025-05/Lustig-Hoover%20Monetary%20Policy%202025%20Comments.pdf
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5188239
https://youtu.be/ymyAP90vFsM?si=eG92OhXnRfzSVM_M
On the 3000 euro digital euro holding limit, two things. First, you can use the reverse waterfall functionality if you link your digital euro wallet to a bank account: any payment beyond the value of your wallet (whether up to the holding limit or beyond is unclear to me) is automatically liquidated using funds from your account. You can have a digital euro wallet without a link to a bank account, but in that case you can do payments only up to the holding limit (which could be higher for this type of wallet). Second, as for firms, they cannot hold digital euros and must have their payment system linked to a bank account. They can accept a digital euro payment, which will be immediately converted to funds in its bank account. Check this document for details:
https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.degov240103_RDG_digital_euro_schemes_update.en.pdf
This means you can use the digital euro for five things that you can only do efficiently today with at least five instruments: transfer money instantaneously at no cost across European countries (you can do this today if the payer and the payee have an account in certain banks, like Revolut, for example); transfer money instantaneously within a country in the Eurozone (all EZ countries have systems for this but they do not work outside each country); make local payments with a digital instrument (you need a debit card and in any case a bank account); buy online (you need a credit card or things like PayPal, which in general also require one); make offline person-to-person payments (you need cash). The digital euro allows you to perform these five tasks with a single instrument.