The ongoing debate surrounding the digital euro continues to intensify, fueled by both the European Central Bank’s (ECB) plans for implementation and growing public skepticism. First announced in 2021, the proposed currency has sparked concerns about privacy and control, leading to a petition with over 388,000 signatures calling for its rejection. The ECB aims to have the digital euro ready by 2029, but its future hinges on regulatory approval and addressing ongoing public anxieties.
The ECB positions the digital euro as a necessary evolution for Europe’s financial infrastructure, citing benefits like enhanced privacy, universal acceptance, and free basic access. However, critics argue it could grant the EU unprecedented control over citizens’ finances, while others question its overall necessity given the existing payment options.
How Would the Digital Euro Work?
Last week, the European Central Bank announced preparations for a potential rollout of the digital euro by 2029. Initial trial phases could begin as early as mid-2027, but this is contingent on the European Parliament approving the relevant regulations in 2026.
The digital euro would represent a new form of central bank money—essentially, digital cash issued directly by the ECB. Currently, the public can only hold central bank money in physical cash. The digital version would allow individuals to hold sovereign money in a digital wallet accessible via smartphones or other devices.
Making payments would resemble current methods, such as using a bank card at a store. However, a crucial distinction exists: card payments rely on private banks and payment processors, while the digital euro would operate directly through the ECB, without intermediaries. This has implications for transaction fees and data control.
The ECB stresses that the digital euro is intended to complement cash, not replace it, offering consumers and businesses an additional payment choice.
Less Freedom in Exchange for Greater Control?
The project has garnered increasing political support, notably from ECB President Christine Lagarde. At an October eurozone summit, European leaders emphasized the need for faster progress to bolster Europe’s monetary sovereignty, economic security, and payment competitiveness.
Concerns persist regarding user data privacy, especially when compared to the experiences of China, where the digital yuan has been used to monitor and restrict financial activity. Chinese authorities have employed the digital currency to oversee transactions linked to illegal sectors, such as gambling.
The ECB asserts its commitment to balancing traceability with privacy, and the EU’s General Data Protection Regulation (GDPR) is expected to offer safeguards. Therefore, the claim that the digital euro will give the EU complete control over citizens’ wallets is not entirely accurate, though it remains a point of contention.
Belgian economist Bruno Colmant has voiced concerns about potential control mechanisms, as well as the risk of hacking. He noted that commercial banks, which would serve as entry points for the digital euro, could inadvertently facilitate transaction tracing, even without users’ knowledge.
A frequently discussed aspect of the digital euro is a potential holding limit of around €3,000 per individual with the ECB. This cap, yet to be finalized in legislation, would apply only to balances held directly with the ECB and wouldn’t restrict overall assets or bank account holdings. Nevertheless, Colmant argues that the risk of at least some level of control “is not zero”.
“There is potentially a loss of privacy protection, because this digital euro could be traced, and it would be possible to know exactly what it is being used for,” he said.
Moving Towards European Payment Autonomy
Some banking executives have expressed reservations about the digital euro’s creation. Daniel Baal, the chief executive of Crédit Mutuel, argued on LinkedIn that the digital euro “does not meet any clear need for citizens” and lacks a significant advantage over existing payment methods.
Similarly, Michael Anseeuw, CEO of BNP Paribas Fortis Belgium, labeled the ECB’s project a “false good idea” to L’Echo, describing it as “superfluous” and highlighting the development of alternative European payment solutions like Wero.
Despite this skepticism, the ECB maintains that a core goal is to reduce Europe’s reliance on non-European payment providers. US companies Visa and Mastercard currently dominate approximately 70% of the European card payment market, and European banks utilize their services despite operating under American licenses.
Valdis Dombrovskis, European Commissioner for the Economy and Productivity, emphasized the importance of strategic autonomy and minimizing dependence on foreign payment systems, particularly given the growth of online commerce. This initiative is part of a broader effort to strengthen Europe’s financial independence and foster innovation in digital payments.
As the 2026 regulatory deadline approaches, continued debate and refinement of the digital euro’s framework are expected. The outcome will significantly impact the future of finance in Europe, influencing consumer privacy, economic sovereignty, and the competitive landscape of the payments industry.
