The euro digital project goes back a few years now. Then, in July 2021, the European Central Bank (ECB) finally decided to campaign. An investigation phase has been launched, which should last two years. Official launch of e-euro, or digital euro, it could be done in 2026. We have recently discovered that the number of digital euros in circulation was limited.
Limit on the number of digital euros in circulation
The knowledge came directly through the voice of Fabio Panetta. Fabio Panetta is a member of the Executive Board of the European Central Bank (ECB). In a speech he gave on Wednesday, June 15, 2022, he mentioned the the question of the number of e-euros in circulation.
Our preliminary analyzes show that negative effects on the financial system and monetary policy would be avoided by keeping the total digital holdings of the euro between one trillion and one trillion euros. (…) This amount would be comparable to current banknote holdings in circulation. With a current euro area population of around 340 million, this would equate to around 3,000 to 4,000 euro euros per person.
Bitcoin vs Digital Euro: various reasons to limit the number of coins
Fabio Panetta therefore seeks to limit the number of “coins” in circulation. This idea may seem strange at first glance. In fact, when we talk about fiat money, we are more accustomed to printing money or unlimited liquidity production. On the other hand, in cryptocurrency, it is something very common. For example, the Bitcoin (BTC) network is limited. Eventually, there will be no more than 21 million BTC coins in circulation. This limit should be reached by 2140. Other major cryptocurrencies are doing the same.
But the reasons for such a limitation are different between e-euro and Bitcoin. Why? For Bitcoin, it’s a limit that allows BTC price rise. Indeed, with limited supply, the price of BTC is likely to increase as demand increases. This makes the network inflated.
As for the digital euro, the reason is different. The idea is to restrict the “saving” of digital euros. With limited supply, users will not be able to mechanically save a lot in e-euro. They will therefore be encouraged to use this electronic money. This would correspond to the main purpose of the digital euro. Suspected of trying to replace this digital euro with cash, the ECB has always rejected this idea. If digital euro is not stored, you can always keep your cash under your mattress according to the ECB…