Lede
A group of seventy economists and policy experts has issued a formal appeal to Members of the European Parliament, urging them to provide strong backing for the development of a digital euro. The experts argue that the implementation of a central bank digital currency is a fundamental requirement for preserving Europe’s monetary sovereignty in an increasingly digital world. Among the prominent signatories of the open letter are Thomas Piketty, the renowned French economist, and José Leandro, who previously served as an executive board director for the European Union at the European Bank for Reconstruction and Development. Together, these experts characterize the proposed digital currency as a critical public good that must be designed to serve the collective interest of all European citizens.
The signatories advocate for a digital means of payment that spans the entire euro area, issued directly by the Eurosystem. They emphasize that such a system must remain free of charge for basic services to ensure accessibility and inclusivity. By establishing this public option, the economists believe Europe can guarantee continued access to central bank money, which is essential as physical cash usage continues to decline in many parts of the economy. The call to action highlights a growing consensus among policy experts that a state-backed digital currency is necessary to maintain the integrity and autonomy of the European financial system against the rise of private alternatives.
Context
The intervention from these economists comes at a pivotal time as the European Central Bank is currently engaged in the preparation phase of the digital euro project. This stage of development is focused on establishing a comprehensive rulebook, finalizing the technical architecture, and exploring various design choices that will define how the currency operates. The ECB has described the digital euro as a public, pan-European payment solution that is specifically engineered to offer cash-like access to central bank money. This includes the development of offline functionality, which would allow users to conduct transactions without an active internet connection, mirroring the convenience and privacy of physical cash.
Beyond basic transactions, the ECB states that the digital euro could support sophisticated use cases such as conditional payments. The design is intended to complement physical cash rather than replace it, ensuring that the public has a digital alternative that is both secure and issued by a central authority. The preparation phase also includes evaluating how the digital euro will integrate into the existing payment ecosystem while respecting anti-money laundering requirements and privacy standards. This technical work is necessary to address the operational complexities and to ensure that the infrastructure is resilient enough to handle a high volume of transactions across the euro area while maintaining financial stability.
Impact
The open letter from the experts cautions that the European Union faces significant risks if it hesitates or chooses to water down the digital euro project. One of the primary warnings is that private stablecoins and foreign payment giants could gain an even greater foothold and influence over the digital payment landscape in Europe. Without a robust public option provided by the Eurosystem, European citizens and merchants may find themselves increasingly dependent on private card schemes and large technology payment platforms, most of which are non-European. This dependence could potentially undermine the autonomy and resilience of the European payment system, especially during periods of financial stress.
To address concerns regarding the impact on the traditional banking sector, the European Central Bank has performed several technical assessments. These studies have specifically looked at the potential for financial instability caused by the movement of deposits from commercial banks into central bank money. The ECB has concluded that no financial stability concerns would arise, even in an adverse scenario, provided that individual holding limits are set at approximately 3,000 euros. This suggests that the digital euro can be implemented in a way that preserves the role of commercial banks while still offering a public digital alternative. By providing a public good that is free for basic use, the digital euro aims to mitigate the influence of external private actors who currently dominate digital transactions.
Outlook
Looking ahead, the success of the digital euro is largely dependent on public acceptance and the resolution of ongoing policy debates. Consumer surveys have consistently shown that strong privacy protections are the most critical condition for the public to accept and use a digital euro. Consequently, both the ECB and policy experts are focused on ensuring that the digital currency offers high standards of data protection, similar to the anonymity provided by physical cash. The preparation phase will continue to refine these safeguards while assessing the investment costs for the banking sector and the overall impact on the existing payment ecosystem.
The signatories of the open letter believe that the digital euro must be established as a euro area‑wide means of payment that remains under public control. As the project moves toward a final decision on issuance, the focus remains on balancing innovation with the need for a stable and sovereign financial infrastructure. The Eurosystem’s goal is to provide a tool that supports modern digital use cases, such as conditional payments, while ensuring that the digital euro remains a public good that is accessible to everyone without charge for basic services. The ongoing work on the rulebook and technical architecture will eventually determine if the digital euro can effectively compete with private payment solutions while upholding the public interest.
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