A group of more than seventy European academics, including economist Thomas Piketty, is warning that the European Parliament is at risk of approving a significantly weakened version of the digital euro. In an open letter published in The Financial Times, the signatories argue that political compromise and sustained lobbying by the financial sector have steadily diluted the original ambition of the project. Without decisive political choices, they warn, Europe will end up with “a digital euro, but not one that truly matters.”
The digital euro is a flagship project of the European Central Bank (ECB) and is designed to function as a digital equivalent of cash. In practical terms, citizens would be able to transfer money from their regular bank account into a digital wallet backed directly by the ECB, and then use that wallet to make payments throughout the eurozone. The system is meant to allow for offline payments, enabling transactions even when internet access is unavailable. This feature is intended to ensure continuity of payments during crises such as cyberattacks, natural disasters, or major infrastructure failures.
Tight limits, structural constraints
According to the academics, these core objectives are now under serious threat as the European Parliament debates the legislation that will define the digital euro’s final shape. The current proposals surround the digital euro with a wide range of restrictions that, taken together, could severely limit its usefulness.
Most notably, strict caps are foreseen on how much money individuals will be allowed to hold in their digital euro wallets. The ceiling is expected to be around €4,000 per person, and possibly even lower. The digital euro would also not pay any interest, making it unattractive as a store of value. At the same time, the distribution of digital euros would largely remain in the hands of commercial banks, rather than being managed directly by public institutions.
The growing list of exceptions, caps and safeguards risks turning the digital euro into little more than a symbolic gesture. – Letter of European academics to the Parliament
Offline payments, which are often presented as one of the system’s key innovations, would also be subject to tight limits and technical constraints. In addition, full and unconditional acceptance by retailers is not guaranteed under the current legislative proposals. Merchants may be able to refuse digital euro payments under certain conditions, further reducing its practical relevance.
According to the authors of the open letter, this growing list of exceptions, caps and safeguards risks turning the digital euro into little more than a symbolic gesture. It may exist in legal and technical terms, they argue, but play only a marginal role in everyday economic life. In that scenario, most citizens would continue to rely on existing private payment systems, while the digital euro remains largely unused.
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Banking interests and lobbying pressure
Such an outcome would suit commercial banks, as it preserves their dominant position within the European payment ecosystem. A strong, widely used public digital currency could potentially compete with bank deposits and private payment services. By keeping the digital euro small, limited and unattractive, the balance of power remains firmly in private hands.
The letter’s authors point to years of intensive lobbying by the banking sector as a key factor behind the dilution of the original proposal. While banks often frame their concerns in terms of financial stability and risk management, the academics argue that these arguments have been used to justify excessive caution and to block more ambitious public alternatives.
Strategic dependence on the United States
A central concern highlighted in the letter is Europe’s growing dependence on American payment networks. The digital euro should reduce Europe’s dependence on payment companies such as Visa, Mastercard, Apple Pay and Google Pay. At present, much of Europe’s everyday payment infrastructure relies on these private, foreign-owned networks, raising concerns about sovereignty, competition, and long-term control over the monetary system. In thirteen eurozone countries, daily electronic payments are processed entirely through systems owned by non-European companies. This creates vulnerabilities, the academics warn, not only in economic terms but also politically and strategically.
Banks share this concern. In September, a consortium of nine major European banks — including ING, KBC, UniCredit and Danske Bank — presented plans for a new European digital payment solution. One of their stated goals was precisely to reduce reliance on American card networks.
Fernando Navarrete Rojas, the Parliament’s rapporteur on the digital euro, has previously argued that a public digital euro might not be necessary if private banks succeed in developing an effective European alternative themselves. But critics disagree with that assessment.
Leaving the future of Europe’s money entirely in private hands would be a fundamental mistake. – Thomas Bollen, journalist specialized in digital euro
According to journalist Thomas Bollen, who has been researching the digital euro for years, leaving the future of Europe’s money entirely in private hands would be a fundamental mistake. In his view, a digital euro should remain firmly within the public domain, precisely in order to restore democratic control over money and payments, rather than reinforcing the power of commercial banks. “When you outsource all money creation to commercial actors—whether private banks or tech and crypto companies—society loses democratic control over the most important steering mechanism of the economy”, he says. “As the use of physical cash continues to decline, a digital form of public money is the only way to counter this development.”
What happens next?
The European Commission presented its legislative proposal for the digital euro in 2023. Since then, EU member states have agreed on a common negotiating position. The European Parliament is expected to vote on its own position later this spring. Only once the Parliament and the Council reach a compromise can the legislation be formally adopted.
If such a political agreement is reached, implementation will still take years. A complex technical rollout would follow, involving banks, payment providers and national authorities. The ECB has previously indicated that payments using the digital euro are unlikely to become reality before around 2029.
At the same time, Europe is also working on new legislation to safeguard the future of physical cash. Separate EU rules are being developed to ensure that citizens across the eurozone continue to have the right to pay with banknotes and coins.
The European Commission’s proposal stipulates that shops may not refuse cash payments without valid reasons, and that member states must ensure sufficient access to cash by maintaining an adequate network of ATMs. EU governments are largely in agreement on these principles.
