ECB Research Finds Holding Limits Can Attract CBDC Balances Rather Than Suppress Them
Key points
- An ECB working paper published in October 2026 reports results from an incentivised experiment with 761 participants in France, Germany, Italy, and Spain.
- Holding limits on a CBDC-like instrument generated an attraction effect, drawing balances toward the cap rather than reducing demand for the instrument.
- The attraction effect was material only when the holding limit was set at a sufficiently high level; low caps did not produce the same behavioural response.
- Reverse waterfall functionality, which auto-converts commercial bank funds into the limited instrument, raised adoption rates while keeping individual balances lower.
- Authors conclude that combining holding limits with automatic funding mechanisms could support CBDC use while containing systemic financial stability risks from large balance accumulations.
A working paper published by European Central Bank (ECB) researchers in October 2026 presents experimental evidence that holding limits on retail central bank digital currencies produce behavioural responses that may run counter to policymakers’ intuitions. The paper, authored by Thomas Garcia, Claudia Lambert, Cosimo Pancaro, Claire Rimbaud, and Alice Soldà, draws on an incentivised online experiment involving 761 participants across France, Germany, Italy, and Spain.
The core finding is that a holding limit can function as an attraction point rather than a deterrent, pulling individuals’ balances toward the cap rather than pushing them away from the instrument altogether. Critically, this effect only becomes material when the limit is set at a high enough level; a low cap does not appear to generate the same gravitational pull. The paper also examines the reverse waterfall mechanism, which automatically converts funds from a commercial bank account into the limited payment instrument when a user’s balance falls short. Enabling this feature increases adoption of the instrument while simultaneously reducing the balances users choose to hold in it.
The policy implication the authors draw is that pairing a holding limit with an automatic funding mechanism may offer a way to encourage CBDC uptake without accumulating the large balances that could pose financial stability risks. Whether that combination holds in a live deployment with real monetary stakes and full product complexity remains an open question, and the paper carries the standard ECB disclaimer that its findings do not represent the institution’s official view.