A new European Central Bank (ECB) stress test has revealed that the introduction of a digital euro could pose serious liquidity challenges for commercial banks during a financial crisis. The simulation found that, in a worst-case “flight to safety” scenario, as much as €700 billion ($811 billion) could move out of bank deposits into ECB-backed digital wallets.
The test, conducted at the request of EU lawmakers, modeled what might happen if savers rushed to shift their funds to a state-backed digital alternative during a market panic. Under current design proposals, individuals could hold up to €3,000 in digital euros. If every citizen took advantage of that full limit, about 8% of total retail deposits would leave the banking system, enough to push around a dozen smaller lenders below minimum liquidity thresholds.
The ECB called this outcome “extremely unlikely” but noted that the simulation underscores how quickly confidence could shift toward a state-guaranteed digital currency in times of stress.
Mild Impact in Normal Conditions
In a more moderate scenario, where citizens only partially use their digital euro balances, outflows would likely fall to about €100 billion, a level the ECB said most banks could comfortably absorb. Officials also noted that a gradual transition from cash to digital payments could offset some liquidity pressure.
Additional tests found that lower holding limits between €500 and €2,000 would sharply reduce withdrawal risks, while maintaining functionality for everyday use. However, at the €3,000 cap, the ECB estimated that banks’ average return on equity (ROE) could drop by around 30 basis points, highlighting the trade-offs regulators face between consumer flexibility and financial stability.
The findings come as EU policymakers weigh the design, caps, and regulatory safeguards of a potential digital euro rollout, expected to advance into legislative discussions in 2026.