The digital euro has become one of Europe’s most contested financial projects, with supporters presenting it as a tool to preserve monetary sovereignty and critics warning that it could expand state surveillance and control over payments.

Backers say a digital euro would reduce the eurozone’s reliance on foreign payment providers, help ensure that central bank money remains available in an increasingly online economy, and offer an alternative in a market where US dollar stablecoins have become prominent. The debate matters because the final design would determine whether a public digital payment option functions mainly as a cash complement, a strategic payments backstop, or a more intrusive form of financial infrastructure.

“The digital euro will reduce Europe’s excessive dependence on non-European providers. It will ensure that Europeans can pay with their money — the sovereign money issued by their central bank — in the digital economy,” said Piero Cipollone, a member of the executive board of the European Central Bank (ECB).

Opponents argue that a central bank digital currency (CBDC) could restrict citizens’ freedom to spend money as they choose. “These are the 8 most dangerous words if you care about freedom: “The digital euro is here to protect Europeans,” said former Deutsche Bank managing director Pius Sprenger.

“This is how they will be able to control EVERY euro you spend. Goodbye money. The ECB will decide how much digital money you can have,” said José Vizner, a Spanish financial commentator.

What is the digital euro?

The digital euro is a proposed digital version of the euro that would be issued by the ECB. That would make it a form of central bank money in digital form, commonly referred to as a CBDC.

For many privacy-focused crypto advocates, the term CBDC is associated with concerns about government overreach, financial monitoring and surveillance. In the United States, President Donald Trump signed an executive order in January to ban CBDCs, citing risks to the financial system, individual privacy and national sovereignty. A ban until 2030 was later formalized in housing legislation.

The ECB has argued that the digital euro would give people in the eurozone another way to make everyday transactions using central bank money as payments increasingly move online. It says the instrument would complement, not replace, physical banknotes and coins.

“The main reason for issuing a digital euro is to preserve the benefits of cash in the digital era,” Cipollone said in a July 14 interview.

Critics counter that one of the defining benefits of banknotes is that they cannot be tracked, traced or frozen at will. Vizner said, “They promise privacy... but it’s money that’s trackable by design.”

Why Europe wants a digital euro

ECB officials have not framed the digital euro as a surveillance tool. Instead, they argue that declining cash use could leave Europe increasingly dependent on private or overseas-operated payment systems such as Visa and Mastercard.

Some policymakers have said Europe lacks sufficient control over critical payment infrastructure. ECB President Christine Lagarde said in 2025: “The entire infrastructure mechanism that allows for payment, credit and debit, is not a European solution... We need to make sure there is a European offer, just in case.”

Consumer groups including the European Consumer Organization (BEUC) have also pointed to potential user benefits. Andrew Canning, the organization’s deputy head of communications, told Cointelegraph that the digital euro could give consumers a “secure and inclusive” payment option that complements existing solutions, particularly for people who face barriers to accessing digital payments.

Opponents say the same infrastructure could give governments and central banks more influence over how citizens use money. Those concerns have been reinforced by precedents in Western democracies. During Canada’s 2022 Freedom Convoy protests, authorities ordered banks, crowdfunding platforms and other financial institutions to freeze accounts linked to the blockades.

Efrat Fenigson, a tech entrepreneur and privacy advocate, said the digital euro could become “the infrastructure for programmable money, programmable identity and programmable behavior,” warning that “freedom doesn’t disappear overnight. It disappears one permission at a time.”

Patrick Schueffel, a professor of banking and finance at the Fribourg School of Management, has also warned that CBDCs could materially increase governments’ ability to monitor financial activity.

Privacy safeguards under discussion

The European Union’s privacy watchdogs have said the project requires strong safeguards. Both the European Data Protection Supervisor (EDPS) and the European Data Protection Board (EDPB) have said that a high level of privacy and data protection is essential if the digital euro is to gain public trust.

The ECB’s digital euro privacy materials state that offline payments would be available to enable “cash-like” privacy and say the central bank would not see personal transaction data. Those safeguards are central to the political debate because privacy protections, wallet limits and access rules would be set through a mix of EU legislation and ECB design decisions rather than by the ECB alone.

Canning told Cointelegraph that BEUC is “currently happy” with the proposal and that “we trust that consumer safeguards are protected in the final negotiations between EU lawmakers.”

However, those assurances have not resolved the objections of critics who remain concerned about how a digital euro could be implemented or modified over time.

How the digital euro would work

Unlike privately issued stablecoins such as Tether or USDC, which are denominated in US dollars, the digital euro would be denominated in euros and issued by the central bank. Consumers would still access it through their regular bank or payment provider.

Unlike physical cash, which people hold directly in wallets, the digital euro would be accessed through electronic wallets. It could be used for payments in stores, online or from wallet to wallet.

The underlying money would remain a liability of the ECB rather than a commercial bank. Supporters say that would give it the same public backing as cash, instead of making it a claim on commercial bank deposits.

That distinction separates the proposed retail digital euro from wholesale CBDC projects, which are typically aimed at banks and financial institutions rather than everyday consumers.

Crypto advocates and banks find common ground

Crypto and privacy advocates have an unusual ally in parts of the banking industry, which has also raised concerns about the digital euro.

Some banks are worried that a shift into central bank digital euros could reduce bank deposits, forcing lenders to reassess loans to businesses and consumers.

Lorenzo Bini Smaghi, an Italian economist and banker who served on the ECB executive board from 2005 to 2011, said, “There is a high risk of financial instability, with strong repercussions for the real economy.”

The ECB says design choices have been made to “minimize any potential risks” to the banking sector. Users would be limited to holding only a small amount of digital euros in their wallets at any time to “prevent excessive outflows of bank deposits,” and “as with cash in your wallet, no interest would be paid on digital euro holdings.”

Estimated costs

The cost of implementing the digital euro has become another point of contention. The ECB estimates the project would require around 1.3 billion euros, or approximately $1.5 billion, in investment, with ongoing operating costs of about €320 million, or $370 million, per year.

Commercial banks and other payment providers would also face substantial costs to integrate the digital euro into their services. The ECB expects implementation costs for the banking sector to range between $4.6 billion and $6.9 billion.

Possible timeline

After years of discussion, lawmakers from the European Parliament, EU member states and the European Commission have begun negotiations on final digital euro legislation. They are aiming to reach an agreement within the next six months.

“We hope the text will be finalized by the end of the year, at which point we’ll be in a position to take a decision on the future issuance of the digital euro,” Cipollone said in a July 13 interview.

If the legislation is approved, the next decision would rest with the ECB’s Governing Council, which would determine whether to launch the digital euro sometime in 2027. Europeans are unlikely to encounter it in daily life before 2029, if the project is approved at all.

CBDC experiments elsewhere

More than 100 countries began exploring CBDCs in recent years, but many have abandoned the idea or shifted toward wholesale models rather than retail digital currencies. The few CBDCs already in production have not seen broad adoption.

China began piloting its digital yuan, or e-CNY, in 2019 and later expanded it across the country. Although it has processed trillions of yuan in transactions, most Chinese consumers still prefer familiar payment apps such as Alipay and WeChat Pay.

The Bahamas became the first country to roll out a nationwide retail CBDC when it launched the Sand Dollar in 2020. The project was intended to improve financial inclusion, but adoption was slower than many expected, prompting authorities to push for wider distribution through commercial banks.

Nigeria’s eNaira also struggled to gain traction after its 2021 launch despite strong government support. In Brazil, the central bank shut down its Drex CBDC platform in 2025, citing cost and privacy concerns.

As the Bank for International Settlements concluded in 2023, “a retail CBDC is a complex undertaking, and not only for the central banks.”