Let the Digital Euro Circulate: Introducing a Retail C.B.D.C. in the Eurozone With Unlimited Holdings by Users

Abstract

The European Central Bank (E.C.B.) anticipates including a holding limit of about e3,000 per user within the design of its potential retail central bank digital currency for the Eurozone, the digital euro. This is principally motivated by concerns regarding compliance with regulations related to anti-money laundering and countering the financing of terrorism and the disintermediation of banks as credit intermediaries. This paper argues that these concerns are unwarranted, and, in any case, the holding limit would not be an effective solution to these concerns. The digital euro could be introduced with unlimited holdings by individual users in conformity with E.U. law and while maintaining banks as credit intermediaries in the Eurozone financial system.