70 European economists urge support for the digital euro… “Public interest must come first”
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Summary
- It was reported that 70 European economists and policy experts urged members of the European Parliament to support the introduction of the digital euro.
- The signatories warned that if reliance on private stablecoins and non-European payment companies increases, Europe’s monetary sovereignty and the resilience of its payment system could be weakened.
- BNP Paribas analysts noted that depending on the individual holding limit and remuneration structure, the banking sector’s funding structure and profitability could come under strain.
Seventy European economists and policy experts have urged members of the European Parliament to back the launch of a digital euro aligned with public objectives. The call reflects concerns that if private stablecoins and non-European payment firms gain greater influence, Europe’s monetary sovereignty could be weakened.
According to Cointelegraph, a media outlet specializing in virtual assets (cryptocurrencies), the group warned in an open letter titled “The Digital Euro: Let the public interest prevail!” that “in the absence of a strong public digital means of payment, Europe’s payment infrastructure could become even more dependent on private stablecoins and large foreign payment conglomerates.”
Signatories included José Leandro, a former European Union Director at the European Bank for Reconstruction and Development (EBRD), and French economist Thomas Piketty. Describing the digital euro as a public good, they stressed the need for a public digital payment instrument usable across the euro area. They argued it should be issued by the Eurosystem, core services should be provided free of charge, and it should complement rather than replace cash.
The signatories said that if the European Union (EU) delays or scales back the digital euro project, European citizens and merchants could become more reliant on non-European card networks and Big Tech payment platforms. That, they added, could undermine the resilience and autonomy of Europe’s payment system in times of financial stress.
The open letter comes as the European Central Bank (ECB) is in a preparatory phase for the digital euro. The ECB is currently reviewing a rulebook, the design of the technical architecture, and offline payment functionality, among other issues, with a final decision on issuance to be made later.
Previously, the ECB said it would design the digital euro as an access channel to central bank money similar to cash, while maintaining financial stability through measures such as individual holding limits and a tiered remuneration structure. In a speech on the 9th, ECB Executive Board member Philip Lane said “the digital euro aims to strike a balance between innovation, privacy protection, and banks’ intermediary role.”
Concerns around the digital euro persist, however. Some commercial banks and policymakers remain skeptical about the risk of deposit outflows, operating costs, and whether there will be meaningful demand. Consumer surveys have also found that acceptance of a digital euro could be low if robust privacy safeguards are not put in place.
Analysts at BNP Paribas noted that when assessing the benefits of a digital euro, its impact on banks’ funding structures and profitability should also be taken into account. Depending on how individual holding limits and the remuneration structure are set, it could place a burden on the banking system, they said.
Meanwhile, the ECB avoided direct comment on the open letter but pointed to its position through related research findings. The ECB presented analysis suggesting that even with an individual holding limit set at 3,000 euros, adverse scenarios would not create problems for financial stability. It also said further research is under way on how a digital euro could be integrated into the existing payments ecosystem and how to address issues such as privacy protection and investment costs.
