The digital euro: A matter of when, not if

“The digital euro would make the EU more competitive on a global scale”
The introduction of a digital euro is inevitable, argues MEP Jerkovic | Photo: Alamy

By Romana Jerkovic

MEP Romana Jerkovic (S&D, HR) is a member of the Committee on Industry, Research and Energy

21 Sep 2023

As we move closer to the official unveiling of the digital euro, many questions remain unanswered. What problem is the digital euro trying to solve? Will it replace cash? What will this mean for our fundamental rights, for privacy and inclusion? Finally, is it necessary?

All important points. However at this point, the digital euro is a question of when - not if.

[To hear the other side of the argument, read this piece arguing against the introduction of a digital euro.]

One could argue that the eurozone’s financial industry is already highly developed: banks enjoy high liquidity; consumers have at their disposal multiple payment options including contactless payments and mobile banking apps; and an efficient retail payments system is in place.  

Building a parallel financial infrastructure around the digital euro for retail payments, critics say, would trigger a tectonic shift in the banking sector According to them, consumer benefits would be few, if any. What is the way forward, then? 

Currently, 114 countries are exploring a central bank digital currency. This alone seems to suggest that the question is not if central bank-issued currencies are coming to the European Union and its Member States, but rather when.  

New private digital currencies continue to arise, such as Facebook’s Diem. At the same time, it is no secret that the EU’s banking industry is heavily dependent on American financial institutions’ infrastructure for processing payments and settlements. 

The implementation of a digital currency supported by the European Central Bank has the potential to tackle these vulnerabilities effectively. It is therefore imperative for the EU to intensify endeavours to finalise the banking union and the capital markets union.  

Additionally, streamlining and enhancing essential processes will contribute to ensuring that EU banks remain competitive on the global stage without any disadvantages. 

Moreover, an EU digital identity wallet could help to integrate a digital euro by making it widely accessible and easy to use. The wallet will offer users access to payments by enabling them to verify their identify with a high degree of security, while giving them full control over the way they manage and share personal data.  

The introduction of a digital euro would also allow future digital transactions to take place without the need for external payment infrastructures – a significant and often overlooked aspect. 

The EU must pool its resources if it wants to stay relevant globally. That means increasing its capacity to act autonomously, and reducing its dependency in strategic areas such as finance, technology, energy and raw materials. The parallel crises we are facing when it comes to health, energy and the cost of living have brought to the surface our dependencies and connected risks. 

Of course, the development and implementation of a digital euro is a complex process that requires careful consideration of areas such as privacy, data protection, fundamental rights and cybersecurity aspects – to name just a few. It is a complex process that will take time but, if implemented correctly, would make the EU more competitive on a global scale.  

The debate around the digital euro is a good opportunity to have a broader conversation around what kind of society we want to live in. We need to create space for a meaningful, fact-based and transparent debate on this important subject – both in the European Parliament and in the Member States. As Europeans, we must remain committed to dialogue and co-operation.