Unlike cryptocurrencies, the digital euro would be issued and guaranteed by the ECB, which would allow it to be stable and secure for users
In October 2020, the European Central Bank (ECB) published a report that marked a turning point in European monetary policy—the official launch of the digital euro project. In this document, the ECB presented a strategic framework for what could become one of the most transformative innovations in the financial landscape of the coming years.
In an increasingly digital and interconnected world, central banks are beginning to explore the possibility of issuing so-called CBDCs (Central Bank Digital Currencies). In Europe, this specifically refers to the digital euro. It’s important to understand that the digital euro is not merely a technological innovation in the field of money. It is a strategic instrument that could reshape the balance of power within the European economic system.
The digital euro project is currently in its preparation phase, which began in October 2023 and will last two years. During this time, the technical aspects of the currency, legal regulations, and usage models are being developed. The ECB and the European Union institutions are expected to decide by the end of 2025 whether the digital euro will actually be introduced. If the decision is positive, its gradual implementation could begin in 2026. However, the process will likely be cautious and phased to avoid risks to financial stability and the functioning of the banking system.
Essentially, the digital euro is an electronic version of cash issued by the ECB, to be used by all citizens and businesses in the eurozone. The idea of a digital currency comes in response to rapid digitalization, changes in payment methods, and the need to strengthen Europe’s economic and monetary independence. The digital euro would be a safe, accessible, and simple alternative to cash while preserving the core features of the existing monetary system.
In short, Europe risks losing direct control over its own currency if citizens continue to rely exclusively on non-European digital tools.
There are several reasons for introducing the digital euro. A commonly cited one is the decline in cash usage, especially among younger people. In many EU countries, most daily payments are made using cards and mobile apps. Specifically, cash is increasingly seen as impractical, concerns about its security are growing, and digital payment systems are becoming more widespread and easier to use. In general, consumer habits are shifting toward payment cards (and more recently wearable devices like smartwatches and smartphones), which allow for fast, easy, and convenient payments. In the eurozone, cash made up 79% of transactions by volume in 2016, but by 2024 that share had fallen to 52%.
Of course, payment habits vary significantly across Europe. Last year, electronic payments dominated in the Netherlands—only 22% of transactions were made in cash. A similar situation exists in Finland, where cash accounted for 27% of transactions and electronic payments for 73%. The opposite is true in Malta, Slovenia, and Austria, where cash still dominates—accounting for 67%, 64%, and 62% of transactions, respectively. Italy is close behind with 61% of payments made in cash, followed by Slovakia and Spain at 57%. In short, although payment methods still differ from country to country, the overall trend is clear—cash is gradually losing its dominance.
Another frequently mentioned reason for the digital euro is the need to strengthen public trust in the payment system, particularly in comparison to cryptocurrencies, which are not subject to state regulation and often face extreme fluctuations in value. Cryptocurrencies such as Bitcoin and Ethereum have become popular in recent years, but they carry significant risks in terms of stability and trust. The first issue is that cryptocurrencies lack government guarantees. They are not tied to any official financial system or government, meaning they are not backed by institutions meant to protect users. No matter how efficient or fast cryptocurrencies may be as a means of payment or savings, they can be extremely volatile, with significant value swings even in a very short period. For example, Bitcoin’s value can drop more than 10% in a single day—a huge fluctuation that creates uncertainty for users. Equally important, cryptocurrencies have no legal protection, meaning users are not shielded from potential losses due to system attacks, hacking, or other malicious activities. This uncertainty undermines user trust, as people cannot be sure their assets are safe or that their cryptocurrency’s value will remain stable.
With the introduction of the digital euro, the eurozone is not trying to eliminate existing payment methods, but to ensure that it retains sovereignty over key aspects of its economy in the future.
Unlike cryptocurrencies, the digital euro would be issued and guaranteed by the ECB, which would make it stable and safe for users.
By its nature, the digital euro would be practically identical to the paper euro, only in digital form, and therefore would be under the full supervision of European regulators. As such, it would represent legal tender that is completely secure because it would be protected by law and controlled by the ECB. Since the ECB would have control over the amount of money in circulation and could respond in case of economic shocks, the digital euro has all the prerequisites to be stable. In this way, users would know that the value of their money would remain predictable and secure.
An important potential advantage of the digital euro is financial inclusion – it would be available to all citizens, including those without a bank account. It is planned that transactions could be carried out offline as well, using cards or mobile apps that do not require a constant internet connection.
Similarly, one of the key aspects of introducing the digital euro is improving the efficiency of cross-border transactions. Specifically, one of the major advantages would be the ability to reduce the costs and time needed to perform cross-border payments within the eurozone. Currently, international payments – even between EU member states using the same currency – often take more time due to the involvement of various banks, intermediaries, and technical systems. Each of those intermediaries charges fees and further slows the process.
The digital euro would enable a system in which funds could be transferred directly between banks and users, without the need for a complex chain of intermediaries. Thanks to the digital infrastructure provided by the ECB, such payments would be almost instantaneous – similar to sending a message over the internet. This kind of system would be especially valuable for businesses, as companies and individuals within the eurozone could send and receive money more quickly, reliably, and cheaply than is currently possible. Additionally, reducing reliance on external payment software (such as PayPal, Stripe, Adyen) would further improve the efficiency and security of financial flows. In this way, the digital euro would not only modernize the European payment system but also lay the foundation for the economy of the future, where the speed and reliability of digital transactions will be crucial.
However, if one reason had to be singled out as the most important for introducing the digital euro, it would certainly be the preservation of the eurozone’s monetary sovereignty.
Although at first glance, the existing payment system may appear stable and functional, its heavy reliance on private financial intermediaries and on infrastructures located outside the eurozone and Europe represents a serious strategic challenge. At a time when an increasing share of daily transactions is conducted digitally, the question of who controls the digital payment channels becomes one of the key issues of economic and political independence.
In other words, every time a eurozone citizen uses a digital payment method, they are using private money – money that is not directly issued by the ECB. When paying with a credit card or through a digital app, the transaction is recorded in the books of a private financial institution, such as a commercial bank. Likewise, if payment is made using a credit card (whether a physical card or through Apple Pay, Google Pay, etc.), the infrastructure used belongs to private American corporations like Visa and Mastercard. Although these systems are fast, efficient, and widely accepted, the fact that they are under the jurisdiction of another country and outside the control of European authorities carries certain risks. For example, in the event of geopolitical tensions, sanctions, or disputes, there is a theoretical possibility that access to those systems could be limited or conditional.
“Although at first glance, the existing payment system may appear stable and functional, its heavy reliance on private financial intermediaries and on infrastructures located outside the eurozone and Europe represents a serious strategic challenge.”
In this often overlooked context, cash remains the only form of public money still available to European citizens.
It is a direct liability of the ECB, unlike the money of commercial banks. Although often portrayed negatively as a means of supporting the grey economy, cash remains the only method of payment fully guaranteed by the ECB.
In short, Europe risks losing direct control over its own currency if citizens continue relying exclusively on non-European digital tools.
That would mean technological and financial dependence, with far-reaching consequences for the monetary sovereignty of the eurozone. The ECB and other European institutions have recognized this dependence as a potential point of vulnerability. That is why the introduction of the digital euro is not seen merely as a technical innovation, but as a strategic move to ensure the continuity of monetary stability and autonomy in the eurozone. Through the development of its own digital means of payment, the eurozone seeks to create a payment infrastructure that is entirely its own – governed by its own rules and aligned with its legal framework.
Furthermore, the digital euro could help foster competition in the electronic payments market, thereby reducing the dominance of a few major global players. This would increase the resilience of the European financial system to external shocks and allow citizens, businesses, and institutions to have a domestic, reliable, and legally protected alternative within the European framework.
By introducing the digital euro, the eurozone is not trying to eliminate existing payment methods but to ensure that it retains sovereignty over key aspects of its economy in the future.
In a world where data, algorithms, and infrastructures are the new currency of power, control over one’s own payment system is not just a matter of technological progress but also of preserving political and economic independence.
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