Digital Euro Urgently Needed: European Economists Warn of Sovereignty Crisis Without Public-First Currency

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Digital Euro Urgently Needed: European Economists Warn of Sovereignty Crisis Without Public-First Currency

In a decisive move that could shape Europe’s financial future, 70 prominent economists and policy experts have issued a stark warning to European Parliament members this week: the digital euro must prioritize public interest above all else, or risk surrendering Europe’s monetary sovereignty to foreign corporations. This urgent call comes as cash usage continues its steady decline across the continent, creating what experts describe as a critical vulnerability in Europe’s financial infrastructure. The collective letter, sent on March 15, 2025, represents one of the most significant interventions in the ongoing digital euro debate, highlighting growing concerns about payment system autonomy in an increasingly digital economy.

Digital Euro Must Serve Public Interest First

The economists’ letter presents a comprehensive vision for what they term a “public-first” digital currency. According to their analysis, the digital euro should function as a public utility rather than a commercial product. They specifically advocate for basic services to remain free of charge, ensuring universal access regardless of income or technical literacy. This approach directly contrasts with existing private payment solutions that often include transaction fees or require minimum balances.

Furthermore, the experts emphasize that the digital currency must maintain complete interoperability across all Eurozone nations. A fragmented system, they argue, would undermine the very purpose of a unified European currency. The letter references successful public digital infrastructure projects like Estonia’s e-residency system and Finland’s digital government services as potential models for implementation.

Safeguarding Europe’s Monetary Sovereignty

Monetary sovereignty forms the core concern driving the economists’ advocacy. As physical cash circulation decreases by approximately 7% annually across Europe, according to European Central Bank data, citizens increasingly rely on private payment processors. This shift creates what experts call “infrastructure dependency” on non-European entities. The letter specifically mentions potential risks from American card networks and Big Tech payment systems expanding their European market share.

The economists present compelling historical context, noting how control over monetary systems has represented a fundamental aspect of state sovereignty for centuries. They reference the European Payments Initiative’s struggles as evidence of the challenges in creating homegrown alternatives to established international players. Without a public digital euro, they contend, Europe could find itself unable to implement independent monetary policy during future financial crises.

The Cash Complementarity Principle

Importantly, the economists explicitly reject any notion that digital euro should replace physical currency. Instead, they advocate for what they term “complementary monetary architecture.” This approach recognizes that approximately 15% of Europeans, particularly elderly and rural populations, still prefer or depend on cash transactions. The European Central Bank’s own research indicates that complete elimination of cash would disproportionately affect vulnerable demographics.

The letter references Japan’s careful approach to digital currency implementation, where authorities have emphasized maintaining cash access even while developing digital alternatives. This balanced perspective acknowledges technological transition while protecting financial inclusion. Experts suggest that Europe could implement similar safeguards, potentially mandating cash acceptance for essential services regardless of digital euro adoption rates.

Competitive Threats to European Payment Infrastructure

The economists’ warning carries particular urgency given recent market developments. International card networks have increased their European transaction volume by 22% over the past three years, while Big Tech payment platforms have grown even faster. This expansion creates what experts describe as “systemic risk concentration” in Europe’s payment ecosystem. Without a public alternative, they argue, Europe could lose both economic leverage and crisis response capability.

The letter specifically highlights several concerning scenarios:

• Sanctions vulnerability: Dependence on foreign payment processors could limit Europe’s ability to implement independent foreign policy
• Data sovereignty risks: Transaction data flowing through non-European systems might not receive GDPR-level protection
• Innovation stagnation: Market dominance by established players could suppress European fintech development
• Financial exclusion: Private companies might exclude certain transactions or demographics for commercial reasons

Historical Precedents and Future Implications

Financial historians contributing to the letter draw parallels with earlier monetary transitions, particularly Europe’s shift from national currencies to the euro. That process, while complex, ultimately strengthened European economic integration. The digital euro, they suggest, represents a similar inflection point for the digital age. However, they caution that delayed action could prove more damaging than imperfect implementation.

Recent developments in other regions add context to the European debate. China’s digital yuan already reaches hundreds of millions of users, while several Caribbean nations have implemented central bank digital currencies. Even the United States, traditionally cautious about digital dollar development, has accelerated research following private stablecoin expansion. Europe’s relatively slow progress, the economists warn, creates strategic vulnerability in an increasingly competitive global financial landscape.

Implementation Challenges and Technical Considerations

While advocating strongly for digital euro development, the economists acknowledge significant implementation hurdles. Privacy protection represents perhaps the most sensitive issue, with European citizens expressing consistent concern about financial surveillance. The letter suggests technical solutions including:

• Offline transaction capability for small payments
• Tiered privacy levels based on transaction size
• Independent oversight of data access protocols
• Regular public transparency reports

Technical infrastructure presents another challenge. The digital euro system must handle potentially billions of transactions daily while maintaining absolute security. Experts reference the successful scaling of European instant payment systems as evidence that such infrastructure is achievable. However, they emphasize that system design must prioritize resilience above all else, given its potential status as critical financial infrastructure.

Conclusion

The economists’ collective intervention marks a pivotal moment in the digital euro debate. Their emphasis on public interest, monetary sovereignty, and cash complementarity provides a clear framework for what could become Europe’s most significant financial innovation since the euro’s introduction. As digital transformation accelerates across all economic sectors, the decisions made about digital euro design will likely resonate for decades. The warning about foreign payment dominance serves as a timely reminder that in the digital age, monetary sovereignty requires active defense through technological innovation. Europe now faces a clear choice: develop a public-interest digital euro or risk gradual erosion of its financial autonomy in an increasingly digital global economy.

FAQs

Q1: What exactly is the digital euro?
The digital euro represents a proposed central bank digital currency (CBDC) that would function as digital cash issued directly by the European Central Bank and national central banks. Unlike commercial bank money or private electronic payments, it would constitute a direct claim on the central bank, combining the security of central bank money with the convenience of digital payments.

Q2: Why are economists concerned about foreign payment dominance?
Foreign payment processors currently handle approximately 65% of European digital transactions. This dependence creates several risks: transaction data may leave European jurisdiction, fees drain economic value from Europe, and during crises or geopolitical tensions, Europe might lack independent payment capabilities. The economists warn this could undermine monetary policy effectiveness and financial stability.

Q3: How would digital euro differ from current digital payments?
Current digital payments typically involve commercial bank transfers or private payment processors. Digital euro would represent central bank money directly, potentially offering stronger legal protection, lower costs for basic services, guaranteed availability during bank crises, and design focused on public benefit rather than profit maximization.

Q4: Will digital euro replace physical cash?
No. The economists explicitly advocate for digital euro to complement rather than replace physical cash. European authorities have repeatedly committed to maintaining cash availability. This approach ensures financial inclusion for all demographics while providing digital convenience for those who prefer it.

Q5: What happens if Europe doesn’t develop a digital euro?
Without a digital euro, economists predict continued expansion of foreign payment processors in European markets. This could gradually reduce European influence over its own payment infrastructure, potentially leading to higher costs for consumers and businesses, reduced crisis response capabilities, and diminished ability to shape global financial standards.

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