- The European Central Bank is pushing for a digital euro as a crisis-proof payment option, but EU lawmakers remain wary over privacy risks and the impact on commercial banks.
- With legislation unlikely before 2026, a full rollout may not happen until 2029, keeping the debate alive for years to come.
The European Central Bank (ECB) has once again urged the adoption of a digital euro, positioning it as a safeguard against future crises. However, there is a catch. Up until now, European lawmakers have remained divided.
This has raised great concerns over factors like privacy, risks to commercial banks, and the potential overreach of central authorities.
ECB Pitches Digital Euro as Crisis Backup
Speaking before the European Parliament’s economic committee, ECB board member Piero Cipollone argued that a digital euro would ensure “all Europeans can pay at all times with a free, universally accepted digital means of payment, even in case of major disruptions.”
Cipollone pointed out that Europe’s current digital payment systems are heavily reliant on non-EU providers, leaving the bloc vulnerable in times of cyberattacks, network outages, or geopolitical stress.
By introducing a central bank digital currency (CBDC), the ECB hopes to bolster financial resilience and reduce dependence on outside infrastructure.
He also noted the rise of U.S. dollar-backed stablecoins, warning that Europe risks falling behind in shaping the future of global payments. A digital euro, Cipollone stressed, would complement physical cash, which remains “key for resilience and inclusion,” but also adapt to the reality that digital payments have become “essential to daily life.”
Lawmakers Push Back on Privacy and Bank Stability
Despite Cipollone’s assurances, many lawmakers expressed deep skepticism. Critics worry that EU citizens could favor ECB-backed accounts over commercial banks, given their perceived safety, potentially destabilizing the private banking sector.
Pierre Pimpie, a member of the Eurosceptic Patriots for Europe group, warned that “accounts in private banks could be emptied” if citizens flocked to central bank-backed holdings. He also objected to the ECB’s authority to impose or adjust caps on account balances, suggesting that such power could be abused during a crisis.
Privacy remains another sticking point. Lawmakers questioned whether a digital euro could truly protect personal data. In response, Cipollone emphasized that the ECB “will not know anything about the payer and the payee” and promised that an offline option would mirror the anonymity of cash. Still, doubts lingered over whether such safeguards could be implemented effectively.
Lawmakers Push Back on Privacy and Bank Stability
Despite Cipollone’s assurances, many lawmakers expressed deep skepticism. Critics worry that EU citizens could favor ECB-backed accounts over commercial banks, given their perceived safety, potentially destabilizing the private banking sector.
Pierre Pimpie, a member of the Eurosceptic Patriots for Europe group, warned that “accounts in private banks could be emptied” if citizens flocked to central bank-backed holdings. He also objected to the ECB’s authority to impose or adjust caps on account balances, suggesting that such power could be abused during a crisis.
Privacy remains another sticking point. Lawmakers questioned whether a digital euro could truly protect personal data. In response, Cipollone emphasized that the ECB “will not know anything about the payer and the payee” and promised that an offline option would mirror the anonymity of cash. Still, doubts lingered over whether such safeguards could be implemented effectively.
Timeline and Next Steps
Legislation for the digital euro has been under discussion since 2023, but political concerns and the 2024 elections have delayed progress. Cipollone indicated that the ECB is working under the assumption that legislation will be finalized by the second quarter of 2026.
If approved by the European Parliament, European Commission, and European Council, the ECB would then spend several years developing and testing the digital currency’s infrastructure. A rollout could come by 2029, though only if lawmakers and institutions can resolve the contentious issues of privacy, banking competition, and monetary control.
