By Marta Vilar – MADRID (Econostream) – European Central Bank Executive Board member Piero Cipollone said on Tuesday that the introduction of a digital euro would not lead to aggregate deposit outflows from euro area banks under normal conditions even with a holding limit as high as €3,000, citing ECB analysis.

The ECB examined hypothetical holding limits ranging from €500 to €3,000 across 2,025 banks, assessing their impact both under normal conditions and in an extreme flight-to-safety scenario, he said.

Under normal conditions, the impact on banks’ liquidity and funding metrics would be “extremely contained,” Cipollone said, according to a speech text released by the ECB.

The ECB estimates that the continued shift from cash towards deposit-based digital payments could generate €127 billion in additional bank deposits by 2034, he said.

According to Cipollone, those inflows would exceed estimated digital euro-related outflows for holding limits up to and including €3,000, meaning “no aggregate outflow would thus be recorded.” 

Even under the extreme scenario, the results remained manageable, Cipollone said. With a €3,000 limit, only 13 banks, representing 0.3% of banking-sector assets, would see their liquidity coverage ratio fall to 100%, while nine banks, accounting for 0.1% of assets, would risk falling below that level.

“The conclusion is clear: within the range assessed, holding limits are effective in containing deposit outflows and safeguarding financial stability,” he said.

Cipollone stressed that the figures were illustrative and did not represent a decision on the eventual holding limit.

The ECB aimed to be ready for a potential first issuance of the digital euro in 2029, assuming the legislative process is completed by the end of 2026, he said.

A 12-month pilot is due to start in the second half of 2027 with 36 payment service providers, he said, noting that the ECB is also exploring future features including conditional payments, AI-enabled payments and micropayments.    

On wholesale finance, Cipollone said the Eurosystem expects its Pontes service, which allows tokenized transactions to settle in central bank money, to be fully implemented by mid-2028, with plans for 24/7 operation and multi-currency capabilities.

He said the ECB also aims to deliver a blueprint for Appia, its longer-term project for an integrated European tokenized financial ecosystem, in 2028.