BRUSSELS, March 2025 – A coalition of 70 prominent European economists and policy experts has issued a compelling call to action, urging European Parliament members to ensure the digital euro serves public interest above all else. This urgent appeal comes as the European Central Bank advances its central bank digital currency project amid growing concerns about payment sovereignty and financial inclusion. The economists’ collective voice represents a significant development in the ongoing debate about Europe’s digital financial future.
Digital Euro Must Protect European Monetary Sovereignty
The economists’ open letter emphasizes the digital euro’s crucial role in safeguarding Europe’s monetary sovereignty. As cash usage continues its steady decline across the continent, the experts argue that public access to central bank money must remain guaranteed. The digital euro would provide this essential access through a secure, state-backed digital payment method. Furthermore, this initiative would maintain European control over payment infrastructure during a period of rapid digital transformation.
Currently, non-European payment processors handle approximately 70% of European card transactions. This market dominance creates significant vulnerabilities for Europe’s financial autonomy. The economists specifically warn about potential control by international card networks and Big Tech payment platforms. Such control could undermine Europe’s ability to implement independent monetary policies during economic crises. The digital euro represents a strategic response to these emerging threats to financial sovereignty.
Key Design Principles for Public Digital Currency
The expert group outlines several fundamental design principles for the digital euro. These principles ensure the currency serves public needs effectively while maintaining financial stability. The economists advocate for basic digital euro services to remain completely free of charge for all users. This approach promotes financial inclusion and prevents exclusion based on economic status. Additionally, the digital currency must function seamlessly across all eurozone countries without fragmentation.
- Universal Accessibility: Available to all eurozone residents regardless of income or banking status
- Cross-Border Functionality: Uniform operation across all 20 eurozone member states
- Privacy Protection: Balanced approach respecting user privacy while preventing illicit activities
- Offline Capability: Functionality without continuous internet connection for reliability
- Interoperability: Compatibility with existing payment systems and private sector innovations
The European Central Bank has already conducted extensive technical testing of digital euro prototypes. These tests examine various architectural approaches and technological implementations. However, the economists emphasize that technical considerations must align with public interest objectives throughout development.
Complementing Physical Cash in Digital Transition
The expert coalition strongly emphasizes that the digital euro should complement rather than replace physical cash. This complementary approach recognizes cash’s continued importance for certain populations and situations. Elderly citizens, rural communities, and individuals preferring privacy still rely heavily on physical currency. Moreover, cash provides essential backup during power outages or technical failures in digital systems.
European cash usage has declined from 79% of point-of-sale transactions in 2016 to approximately 59% in 2024. Despite this decline, cash remains vital for financial inclusion and emergency preparedness. The economists propose maintaining mandatory acceptance of physical cash alongside digital euro implementation. This dual-system approach would ensure no European citizen faces exclusion from the payment ecosystem during the digital transition period.
Timeline and Implementation Challenges
The digital euro project follows a carefully structured timeline with multiple development phases. The investigation phase concluded in October 2023 with positive findings about technical feasibility. Currently, the preparation phase focuses on finalizing rulebooks and selecting service providers. The table below outlines the projected implementation timeline:
| Phase | Timeline | Key Activities |
|---|---|---|
| Preparation | 2023-2025 | Rulebook development, provider selection, testing |
| Decision | Late 2025 | Governing Council final approval |
| Development | 2026-2027 | Full-scale development and testing |
| Pilot Launch | 2028 | Limited pilot programs in select countries |
| Full Implementation | 2029+ | Gradual rollout across eurozone |
Implementation faces several significant challenges that require careful navigation. Technical scalability must accommodate potentially hundreds of millions of users simultaneously. Cybersecurity measures must protect against increasingly sophisticated digital threats. Furthermore, legal frameworks need updating to accommodate this new form of central bank money. The economists stress that addressing these challenges requires substantial public investment and political commitment.
Comparative Analysis with Global CBDC Developments
Europe’s digital euro development occurs within a global context of central bank digital currency exploration. Over 130 countries representing 98% of global GDP are currently exploring CBDCs. However, approaches vary significantly between regions based on different economic priorities and financial systems.
China’s digital yuan represents the most advanced large-scale CBDC implementation, with over 260 million wallets created. The Chinese approach emphasizes state control and surveillance capabilities. Conversely, Sweden’s e-krona project focuses on maintaining access to central bank money as cash disappears. The United States continues researching a digital dollar but remains cautious about implementation timing.
The European approach, as advocated by the economists, emphasizes balancing innovation with fundamental rights protection. This includes strong privacy safeguards absent in some other CBDC models. Additionally, the digital euro would operate through supervised financial intermediaries rather than direct central bank accounts for most users. This two-tier model leverages existing banking infrastructure while ensuring public access.
Economic Impacts and Financial Stability Considerations
The digital euro’s introduction carries significant implications for European financial stability and monetary policy transmission. Economists analyze potential impacts on bank deposit stability and lending capacity. Some experts express concerns about possible deposit flight from commercial banks to central bank digital accounts during crises. However, design features like holding limits and tiered remuneration can mitigate these risks effectively.
Positive economic impacts include reduced transaction costs for cross-border payments within the eurozone. Currently, these costs average 2-3% for consumer transactions between eurozone countries. The digital euro could reduce these costs substantially through more efficient settlement mechanisms. Additionally, programmable features could enable more targeted fiscal policy implementation during economic downturns.
Financial inclusion represents another significant potential benefit. Approximately 5% of European adults remain unbanked or underbanked. The digital euro could provide these individuals with secure payment options without requiring traditional bank accounts. This accessibility aligns with the European Union’s broader financial inclusion objectives for the digital age.
Conclusion
The collective appeal from 70 European economists highlights the digital euro’s profound importance for Europe’s financial future. Their emphasis on public interest, monetary sovereignty, and complementary cash access provides crucial guidance for policymakers. As development progresses, balancing innovation with fundamental rights protection remains paramount. The digital euro represents not merely a technological upgrade but a strategic tool for preserving European autonomy in an increasingly digital global economy. Successful implementation requires sustained commitment to the principles outlined by Europe’s economic experts.
FAQs
Q1: What is the main purpose of the digital euro according to the economists?
The economists argue the digital euro must primarily serve public interest by safeguarding monetary sovereignty, ensuring access to central bank money, and providing a secure European payment alternative to foreign-dominated systems.
Q2: Will the digital euro replace physical cash?
No, the economists emphasize the digital euro should complement rather than replace physical cash. They advocate maintaining cash availability alongside digital options to ensure financial inclusion for all population segments.
Q3: What risks do the economists identify if Europe hesitates on the digital euro?
They warn that hesitation could allow non-European card companies and Big Tech payment firms to dominate Europe’s payment market, undermining payment infrastructure autonomy and crisis response capabilities.
Q4: How will the digital euro be made accessible to the public?
The economists recommend basic services be provided free of charge, with universal accessibility across all eurozone countries, regardless of users’ banking status or income level.
Q5: What is the current timeline for digital euro implementation?
The preparation phase continues through 2025, with a decision expected late 2025. If approved, development would occur 2026-2027, followed by pilot programs in 2028 and gradual full implementation from 2029 onward.
