70 Economists Urge EU to Launch a Public Digital Euro Over Private Stablecoins

Seventy economists from Europe are advocating for the European Union (EU) to prioritize public interests over private lobbying in the development of the digital euro. They caution that poor design could lead Europe to rely on foreign payment systems and dollar-pegged stablecoins, stressing the need for the digital euro to be a strong alternative to private currencies.

Key Takeaways

Economists' Appeal: 70 economists urge the EU to prioritize public interests in the digital euro's development.
Concentration of Payment Systems: Europe's payment infrastructure is dangerously dependent on foreign non-European providers.
Essential Features: The digital euro needs to ensure privacy, accessibility, and act as a reliable store of value.
Strategic Positioning: The European Central Bank (ECB) emphasizes the digital euro's role in strengthening Europe’s financial system.
Timeline: Technical preparations for the digital euro are advancing, with pilot transactions expected by mid-2027 and potential launches in 2029.

70 Economists Urge EU to Launch Public Digital Euro Over Private Stablecoins

Economists’ Call for Reconsideration of the Digital Euro

Seventy economists from across Europe are urging EU lawmakers to put the public interest first and minimize private sector influence in determining the future of the digital euro. They warn that if not designed thoughtfully, the digital euro could leave Europe vulnerable, heavily reliant on foreign payment systems and dollar-backed stablecoins.

This appeal, expressed in an open letter published by Utrecht University’s Sustainable Finance Lab, is timely, given that the European Parliament is close to finalizing legislation essential for establishing the digital currency as a viable alternative to private money, rather than a “symbolic compromise.”

The authors of the letter highlight concerning trends in Europe’s payment infrastructure, noting that thirteen eurozone nations now completely depend on international card schemes for basic retail transactions.

“This dependence on foreign (U.S.) payment providers poses risks for European citizens, businesses, and governments, exposing them to external influences and vulnerabilities that are outside of Europe’s control,” they state. The authors stress that while Europe deliberates, U.S.-backed private digital currencies continue to gain traction.

EU Digital Euro - The Open Letter Screenshot

Key Features for a Successful Digital Euro

The signatories of the letter, which include distinguished economic figures like former central bank governors and economists such as Thomas Piketty and Paul De Grauwe, insist that three critical features must be embedded in the digital euro.

Structural Role: It should serve as “the backbone of a sovereign and resilient European payment infrastructure, developed through local providers that adhere to high standards of privacy.”
Inclusivity: It must function as “public digital money available to all Europeans, enhancing financial inclusion.”
Value Stability: It should provide “a credible store of value through a sufficient and gradually increasing holding limit.”

The economists caution that without these crucial elements, the digital euro may fail to fulfill its potential.

“If a substantial number of European businesses are excluded or can refuse to accept it, or if holding limits are too low for it to be considered a serious store of value, the digital euro will not achieve its intended goals,” they warn.

The letter frames the urgent question facing Europe: “Will Europeans take control of their money in the digital era, or will they let others decide for them?”

ECB's Vision for the Digital Euro

Philip Lane, a member of the European Central Bank’s (ECB) Executive Board, recently reinforced the importance of the digital euro in a speech delivered to the Danish Economic Society on January 9. He linked its development to broader efforts aimed at enhancing Europe’s financial infrastructure.

Lane indicated that common shocks, such as geopolitical changes, digital transformation, and climate issues, should be managed through monetary union, with the digital euro offering “retail central bank money in digital form” as transactions advance.

EU Digital Euro - ECB Philip Lane image

He also discussed Europe's ongoing shortage of safe assets, pointing out that the German Bund alone is insufficient to satisfy global demands for euro-denominated securities. He proposed solutions ranging from expanded common bonds for public goods to a “blue bond/red bond” concept, which would earmark tax revenues to back jointly issued securities.

“The collective benefit would be a reduction in debt servicing costs generated by the safe asset provisions stemming from a bolstered pool of common debt,” Lane articulated.

Progressing Timeline Amid Political Discussions

As technical preparations are nearing fruition following the ECB's decision in October to transition into a readiness phase, ECB President Christine Lagarde indicated last month that “we have completed our tasks and are now relying on EU institutions to finalize the necessary legislation.”

Board member Piero Cipollone mentioned that pilot transactions might start around mid-2027, with the actual launch possible by 2029 if the legal framework receives approval next year.

Recently, the EU Council has also established its negotiating stance, outlining a framework that accommodates both online and offline payment methods.

The offline version would facilitate transactions directly between devices without requiring internet access, thereby offering privacy similar to cash for low-value payments and ensuring compliance with anti-money laundering regulations for wallet funding.

Lagarde reiterated that the digital euro aims to complement physical currency within the regulatory landscape defined by Europe’s Markets in Crypto-Assets Regulation (MiCA), describing MiCA-compliant stablecoins as “an alternative payment form” perceived as “safe.”

Despite these developments, public acceptance of the digital euro remains uncertain, as recent surveys conducted by the ECB showed that many Europeans perceive limited necessity for this new payment method, despite official reassurances.