CBDC - Digital euro: between holding limits and privacy concerns, the ECB continues its research
The European Central Bank recently published its second progress report on the digital euro, highlighting new developments but also some ongoing issues that could hinder the adoption of the future European digital currency.
The project, which could be launched in October 2025, is facing several crucial challenges. Among these, the issue of holding limits is causing particular friction between the ECB and national central banks. The proposed “reverse waterfall” system, which would automatically transfer excess digital euros to traditional bank accounts, raises questions about the practical utility of the digital currency for citizens.
On the privacy front, despite reassurances from ECB Executive Board member Piero Cipollone regarding “superior standards to current commercial solutions," doubts remain about the ability to balance transparency and privacy. The ECB is reportedly working on implementing cash-like features for privacy-conscious users, but technical details are still to be defined.
The report stated that a solution for offline transactions is still being investigated.
📍Challenges and future obstacles The ECB’s approach raises some concerns. The possession limit could be too restrictive and discourage adoption. What would be the point of having a new euro account if, once a certain threshold is surpassed, the money is transferred to another bank account? On the other hand, high holding limits could lead citizens to withdraw their funds from traditional banks during crises, destabilizing the banking system.
Another critical point concerns interoperability with existing payment systems and the real need for a CBDC in an ecosystem already rich in private digital solutions. With all the fintech solutions available to European citizens, is a digital euro truly necessary? One of the ECB’s goals is to reduce dependence on U.S.-dominated payment systems (Visa and Mastercard).
The ECB will also face the challenge of convincing European citizens of the benefits of the digital euro compared to current payment tools, considering many may perceive it as an additional tool for financial control.
All of this for a project that would cost between €400 million and €1 billion, according to ECB Executive Board member Piero Cipollone, in response to a question from Cypriot MEP Fidias Panayiotou.
The ECB will publish its next report on the progress of the digital euro in the second quarter of 2025, ahead of the final decision in October 2025.
📍The global CBDC landscape While Europe continues its research, other countries are accelerating their CBDC projects. China is leading the way with its e-CNY, already tested by millions of citizens in various cities. However, according to the South China Morning Post, the adoption of China’s digital yuan is hindered by the dominance of Alipay and WeChat Pay in the country’s mobile payment market.
According to the Atlantic Council’s CBDC Tracker, over 130 countries, representing 98% of global GDP, are exploring CBDCs.
The United States maintains a more cautious approach, with the Federal Reserve still evaluating the pros and cons of a digital dollar. Elected President Donald Trump has repeatedly expressed opposition to the potential issuance of a national CBDC.
In response to international sanctions, Russia is accelerating the development of the digital ruble as an alternative to the SWIFT system. The Bank of Russia plans to launch the digital ruble nationwide by 2025. Starting July 1, 2025, major Russian banks will be required to allow their customers to make transactions using the CBDC, including money transfers and account management. Additionally, companies operating in Russia will have to accept digital ruble payments via QR codes for goods and services.
Atlas21
Digital euro: between holding limits and privacy concerns, the ECB continues its research
As the European Central Bank approaches its final decision set for October 2025, concerns about privacy and possession limits remain.
