Digital Eurobanking. Credit: T. Schneider – Shutterstock
The European Central Bank (ECB) is ahead of its plans to launch a digital euro by 2029 despite raising concerns from lawmakers, banking associations and privacy advocates about its impact on freedom and financial stability.
The proposed Central Bank Digital Currency (CBDC) aims to provide public digital alternatives to cash. However, critics warn that it could create problems for commercial banks and open the door to financial surveillance. Piero Cipolone, a member of the ECB Board, defended the plan during his recent testimony before the European Parliament, claiming that the digital euro is a “public good” that guarantees accessible payments even in the midst of a crisis. “The digital euro does not replace it, it complements cash and meets the highest privacy standards,” Cipollone assured.
ECB 4-Year Roadmap Released Digital Euro
The Digital Euro Project began in 2020, with social distancing during the pandemic continuing its research phase in 2021. After three years of technical testing and public consultation, the project entered the preparatory stages in late 2023, with the ECB creating a rulebook and submitting legislative proposals. The current timeline shows that the European Parliament, Council of Europe and the European Commission will finalize the law by mid-2026, requiring three years of infrastructure development, with the goal of launching in 2029.
The ECB expects the digital euro to be a fast, low-cost payment solution to improve financial inclusion and strengthen European monetary sovereignty amid declining cash usage and an increase in private cryptocurrency. It could also streamline cross-border payments within the eurozone and promote more economic integration.
Lawmakers and banks push back digital euro plans
Despite these lofty ambitions, the digital euro faces fierce opposition. European lawmakers argue that by allowing citizens to hold central bank accounts, they emit deposits from commercial banks, threatening their financial stability and ability to lend in the long term. The German banking association warns that deposit outflows could weaken customer relationships, increase lending costs and advocate strict holding limits of between 3,000 and 4,000 euros per user. European Savings and Retail Banking Group also said the digital euro could win more than a third of card transactions and erode bank revenue from payment fees.
The 2021 public consultations returned with the most respondents coming from Germany, but the results were ambiguous. Most of the respondents favored CBDC, but they had very strict privacy safeguards.
Weak global enthusiasm for digital cash
Globally, CBDCs are losing steam. Three years ago, more than 170 projects were developed, but advanced economies such as the US, UK, Canada, Denmark and Sweden claim that there is too much privacy concern and too much public demand. The British Senator called CBDCS “a solution for problems.” This is a sentiment resonated by eurozone critics who question the need for a digital euro considering existing payment systems.
ECB’s digital europlan still faces opposition
The ECB is one of the few central banks in the developed economy committed to retail CBDCs, but its success depends on Congressional approval and could delay or fundamentally change the project. Critics like economics researcher Julian Pratt warn about potential operations at banks if depositors shift funds rapidly to digital eurowallets during the crisis, while others like Jesabel Couppie Soubieran say the public doesn’t convince politicians about potential privacy risks and demand even more robust parents.
For now, the digital euro represents a paradox. It represents a deep contest in the home, essential to Europe’s economic independence. As the ECB navigates the opposition, the fate of the project will depend on finding a balance between concerns and innovation among banks, lawmakers and, hopefully, EU citizens.
