ECB Report: Preparations for the Digital Euro Continue, Focusing on Holding Limits and Privacy Issues

The European Central Bank (ECB) has published the second progress report on the preparatory phase for the issuance of the digital euro. The report discusses issues such as holding limits and legal coordination related to central bank digital currency (CBDC).
After reviewing the draft rulebook for the digital euro, the Rulebook Development Group has initiated seven workflows led by market participants and the central bank, which will continue its development.
The rulebook aims to harmonize national laws to ensure common standards. A report on its progress was published in September, and another report will be published in July 2025.
The ECB stated that it is continuing to study the profiles of digital euro users to identify the needs of potential users. This input will include user preferences for holding limits, which will be considered in technical research conducted with national central banks. Politico reported in October that holding limits have become a focal point of debate between the ECB and national central banks.
To maintain the highest holding limits, a solution currently under consideration is the 'reverse waterfall', which automatically transfers excess digital euros into a fiat currency account with an affiliated bank. The report states that solutions for offline transactions are still being studied, but no further details have been disclosed.

A major theme of the report is the competition between European and non-European service providers in the financial market, as well as the demand for more technological services like wallets. The report emphasizes: 'Payment service providers (PSPs) will be able to use the digital euro infrastructure to create new payment services. The digital euro will also assist regional and domestic plans to expand their payment service offerings, accepting payments through the digital euro.'
The report also notes 'the possibility of making some improvements to the user experience of the digital euro so that citizens with stronger privacy preferences can enjoy cash-like privacy.' (Cointelegraph)