A European Central Bank (ECB) simulation has found that a digital euro could drain up to €700 billion in deposits from commercial banks during a severe financial panic, potentially pushing about a dozen eurozone lenders into a liquidity squeeze.
The study, published on Friday and requested by European lawmakers, explored how the introduction of a central bank–backed digital currency might affect financial stability. In a worst-case “flight-to-safety” scenario, the ECB estimated that depositors could shift €699 billion—about 8.2% of all retail sight deposits—into digital euros if each user were allowed to hold up to €3,000.
The ECB said 13 of 2,025 banks in its analysis would breach their mandatory Liquidity Coverage Ratio (LCR) under such stress. Smaller lenders relying heavily on household deposits would face the greatest strain.
“In a digital age, bank runs happen much quicker and much more forcefully than before,” warned Markus Ferber, a European Parliament lawmaker, urging caution over high holding limits.
However, the central bank described the scenario as “highly unlikely.” Under normal conditions, outflows would total just over €100 billion, well within safe liquidity margins. The ECB said lower holding caps of €500–€2,000 would sharply reduce risk and confirmed that such limits “safeguard the stability of the financial system.”
The study also found that a €3,000 limit could trim banks’ return on equity by 0.3 percentage points, varying by country.
“You can only make the digital euro attractive if you’re willing to hurt banks a little,” said Fabio De Masi, a German MEP.