The digital euro: a must-have, a nice-to-have, or devil’s stuff?

We have now all been well accustomed to electronic money transactions for decades. Our pension and salaries arrive digitally on our bank accounts, we have usually authorized several automatic direct debit mandates, and many daily purchases are made by debit/credit card or via payment systems such as PayPal or Apple Pay. Moreover, innovations such as various types of cryptocurrencies carry the potential to fundamentally alter the public good nature of money as a means of transaction, unit of account, and a store of value.

Basically, the digital euro is a proposed central bank digital currency (CBDC) being developed by the European Central Bank (ECB) and national central banks of the eurozone. It will serve as a digital equivalent to physical cash, allowing citizens and businesses to make secure, accepted electronic payments anywhere in the euro area. Importantly, it will not replace physical banknotes or coins, nor will it replace private bank accounts.

Thus, the digital euro project stands at the centre of the transformation of money in a context shaped by digitalization and geopolitical rivalry. Beyond being a technical innovation, the digital euro relates to Europe’s sovereignty within the global financial system, its dependence on external infrastructures controlled by non-European providers, and its ability to project the international role of the euro.

The European Central Bank views the digital euro as a must-have public good to protect monetary sovereignty, to strengthen financial resilience, to cut reliance on foreign payment giants, and to provide a public alternative to the rise of cryptocurrencies and stablecoins. Critics, including commercial banks, see it anywhere, from a nice-to-have backup for existing payment options, to devil’s stuff threatening privacy and financial stability. In any case, legislative and technical preparations are underway for a potential rollout around 2029. Thus, a broader reflection about its opportunities and risks, its design, and its social acceptance are clearly warranted.

Why proponents call it a "must-have"

• Strategic sovereignty: A key ingredient for monetary credibility and resilience given the rise of stablecoins and crypto-assets; reducing Europe's heavy reliance on non-European card networks like Visa and Mastercard and big-tech mobile wallets.

• Universal access: Guarantees a free, trusted public digital payment method accepted everywhere in the euro area, mirroring physical cash, alleviating financial exclusion.

• Ecosystem foundation: Provides unified open standards that can help local European payment providers scale and compete.

Why sceptics call it "nice-to-have"

• Private alternatives exist: Instant payments, mobile apps, and commercial digital wallets already handle daily transactions efficiently.

• Questionable added value: Many commercial banks question the extra utility compared to upcoming private banking innovations.

Why critics frame it as "devil’s stuff"

• Surveillance and privacy fears: Concerns that a CBDC could be misused for financial tracking, censorship, or programmable "perishable" money.

• Banking disintermediation: Risk that nervous citizens might move large deposits out of commercial banks and into the central bank during a crisis, starving the economy of credit.

The recent geopolitical developments have certainly strengthened the case for stronger strategic autonomy in international financial and monetary matters, given the rising tensions in the international arena and the growing risk of intensified economic warfare in the months and years ahead. The EU cannot afford leaving a void in the financial architecture, clearly requiring the European Central Bank to be the public anchor for all euros, including retail and wholesale digital currency.

Work on a “wholesale” digital euro has centred around the increasing use of distributed ledger technology, tokenised settlement and how to link the ECB’s payment rails to private-sector projects, with a longer-term view to ensure central bank services and collateral services remain properly linked with the rest of the financial system. Obviously, a wholesale digital euro would provide the euro with a credible anchor in the programmable financial sphere and thus, should be considered as strategically indispensable.

The retail project, which has received considerably more public attention, is currently advancing through the EU’s co-legislative procedures and subject to a broader debate. While some of the arguments of the critics should not be too easily dismissed, many of the concerns related to the alleged witches’ brew can certainly be addressed by privacy safeguards and holding limits proposed for the digital euro in retail use. However, the implementation of the retail digital euro, while ultimately an important complement to a full digital euro, may unfortunately take some more time given Europe’s slow-moving political processes.