The Digital Euro Just Hit a Wall of Resistance

Turns out the Euro Area’s banks, citizens and even some EU lawmakers are not quite so keen on the project.

A few days ago, ECB President Christine Lagarde announced two pieces of what she called “good news” for Euro Area citizens. First, the 20 finance ministers of the Eurozone member states have backed the ECB’s digital euro plans, and have even asked the central bank to accelerate its roll out. Second, the ECB’s governing council has set a formal launch date for the digital euro: 2029.

The digital euro would complement banknotes and extend the benefits of cash to the digital sphere. This is important because euro cash brings us together.

Europeans would have the freedom to use the digital euro for any digital payment, online or offline, throughout the euro… pic.twitter.com/XzNZbl6mD8

— European Central Bank (@ecb) October 31, 2025

There are some key differences between the ECB’s proposed digital euro, and the digital euro currency currently in use. For a start, the former will be money issued by the state, via the central bank (though it will still be commercial banks that manage all the customer-facing activities) and individual users will be allowed to hold a maximum deposit of 3,000 euros at any one time. The latter, meanwhile, is private money issued and managed by commercial banks.

As the use of cash has declined, in part because of the war waged upon it by the EU Commission and, to a lesser extent, the ECB, the amount of public money in the economy has also declined. Now, the two EU institutions want to reverse this dynamic by issuing their own central bank digital currency, or CBDC, which as we’ve been warning for the past three years will give the ECB far more granular control over the economy — and everybody’s spending.

However, they may have their work cut out. The digital euro they have been working on for at least the past five years is staunchly opposed by many of the euro area’s largest banks, which are now trying to develop a private-sector alternative. There are also murmurs of disquiet among European lawmakers. From the Financial Times:

The European Central Bank’s plan to launch a digital euro by 2029 has run into strong opposition from EU lawmakers and Europe’s banking industry.

Ahead of a key European parliamentary hearing on the project on Wednesday, 14 lenders including Deutsche Bank, BNP Paribas and ING warned that the digital euro could undermine private sector payment systems.

The 14 banks have teamed up to create a private sector rival to US payments companies such as Mastercard, Visa and PayPal. The service, Wero, was launched last year.

“The current design of the retail digital euro largely addresses the same use cases as private solutions, without offering any clear added value for consumers,” the banks said ahead of Wednesday’s hearing.

Persistent Fragmentation

This being the EU, the wero is not the only private sector-led mobile payments system under development. While the wero is currently limited to Germany, France, the Netherlands, Belgium and Luxembourg, national mobile payment systems from other parts of Europe — such as Bizum in Spain and Bancomat in Italy — have joined a separate alliance called EuroPA.

In short, fragmentation is still the order of the day in the Euro Area’s banking system.

Two separate reports last year by Mario Draghi and Enrico Letta cautioned that no true EU-wide wallet would ever work unless national payment systems were made interoperable, or phased out entirely. As a result, the Euro Area’s payments system would continue to be dominated by the US payment card duopoly, Visa and Mastercard.

Yet as Brussels Signal reported in July, “as yet no single wallet connects everyone”.

And now opposition is rising to the ECB’s digital euro proposals, including among the EU’s own lawmakers. As the FT reports, Fernando Navarrete, a conservative MEP from Spain appointed by the European parliament to lead the European Parliament’s legislative push for a digital euro, has argued for a significantly scaled-down version of the project.

Navarette’s predecessor in the role, the German MEP Stefan Berger, also from the conservative European Popular Party bloc, become one of the digital euro’s fiercest critics, eventually stepping down from the role. Among other things, Berger voiced concerns about the existential threat the proposed CBDC could pose to small German savings banks. From Politico:

According to Berger, what banks fear most is that the digital euro could prompt customers to withdraw deposits very suddenly, sparking a destabilizing bank run on smaller lenders. “It’s no longer the money of the bank [after it is transferred],” Berger said, adding that the average deposit for a small German bank is about €3,000.

Coincidentally, €3,000 is the proposed holding limit for the digital euro.

“Just Reverse It”

Berger, like Navarette, became convinced that central bank control over digital infrastructure should be limited, arguing instead for the introduction of a so-called wholesale model governing transactions between the central bank and the banking industry. He thought that could be a way to calm everyone’s fears.

“This was my idea, just reverse it, but the ECB … they don’t want [to], and the Commission said: ‘No, just make progress with this file,’” he said.

Berger began facing accusations from MEPs in the S&D (socialists), Renew Europe (liberals) and Greens blocs, most of whom support the introduction of the digital euro, that he was undermining the “democratic process.” Eventually, he handed in his notice.

Now, his successor in the role is expressing similar reservations about a digital euro for retail payments. In his draft opinion, Navarette argues that the ECB and Commission should initially focus on launching a digital euro for money transactions between banks (known in the trade as a wholesale CBDC) and an offline digital euro for the general public.

This would come in the form of a credit stored on a special device, presumably in card form or on a smartphone, that would allow members of the public to pay at the point of sale without an internet connection. Navarette argues that such a system should not depend on a central processing authority, allowing for digital anonymous payments.

Another potential advantage of an offline digital euro is that it would strengthen the resilience of the payment system in the event of power outages and payment system failures. Just like cash, the offline digital euro could continue to be used in such situations. The draft opinion also suggests watering down the proposed obligation to accept digital euros in all retail settings.

The German financial journalist Norbert Häring offers an interesting critique of Navarette’s proposals in his post (in German), “Strong Headwinds for Brussels’ Digital Euro”.

Navarrete seems to have the interests of the banking sector front of mind. It is the financial sector, in particular, that is worried about the prospect of competition coming from a digital euro, and it strongly opposes it.

Navarrete is absolutely right that it is hard for the Commission and the ECB to plausibly identify a problem the digital euro solves… [As he argues], it would be much more sensible and easier to help the existing EU-based payment systems achieve a Europe-wide breakthrough, thereby helping to reduce the bloc’s dependence on Visa and Mastercard. What Navarrete does not mention, however, is that it is the Commission’s own regulations that prevent domestic providers from taking market share from Visa and Mastercard.

Presumably as an anti-cash measure, the Commission has, through its Second Payment Directive (PSD2), prevented merchants from passing on the varying payment card fees to their customers as surcharges or discounts. As a result, customers have no incentive to replace the cards of the US-based market leaders, which are relatively expensive for retailers, with cards from domestic competitors that are comparatively cheaper. This allows the market leaders to exploit the benefits of their much larger network… unchecked. This provision would first have to be dropped. (By the way, the regulation does not prohibit surcharges for cash payers, only discounts.)

Navarrete unerringly skewered the weak argumentation for the necessity of the digital euro in the online version… However, his argument that a digital euro for offline use, a direct competitor to cash, would reduce Europe’s dependence on foreign payment providers is absurd. Cash is a form of payment that is as independent of foreign providers as it gets. If it is displaced by a digital euro, nothing will be gained in terms of independence, but a lot will be lost.

After all, the cash infrastructure is already under threat because cash use is declining, in part due to anti-cash regulations. Even now, a central argument of retailers who stop accepting cash is that only a few customers pay by cash anyway. The fewer transactions there are with cash, the more expensive it becomes to maintain and operate the cash infrastructure…

If the offline digital euro takes – let’s say – half of the current market share from cash, then that will spell the end of cash. Nothing guarantees that the offline digital euro would completely fill the gap left over. Much would end up going to Visa and Mastercard as additional market share.

It’s also true that the US payment card companies, banks and many Silicon Valley companies have been involved in the development of central bank digital currencies, including the digital euro, all along, and the ECB wants to have the data stored in US cloud services.

Simply Not Credible

In other words, the ECB and EU Commission’s claims that the digital euro is urgently needed to protect Europe from the US’ overweening influence is simply not credible. This is, after all, the same Commission that has crippled the EU’s economy by endlessly sanctioning its cheapest energy provider, Russia, mainly for Washington’s benefit, and which signed an absurdly one-sided trade deal with Trump, subordinating the EU as the US’ largest ever vassal state.

What was all that talk about “European sovereignty”?

For years, Brussels told us the EU was ending dependence on foreign powers. We heard sermons about "strategic autonomy" and "open but assertive trade".

The 2025 trade deal is not a negotiation — it’s a capitulation. A 15%… pic.twitter.com/jBx4o0vfc1

— Daniel Foubert 🇫🇷🇵🇱 (@Arrogance_0024) July 28, 2025

This week, EU Commission President Ursula von der Leyen, French President Emmanuel Macron and German Chancellor Friedrich Merz cancelled their plans to attend a summit with Latin American and Caribbean states in Colombia after Trump accused Colombian President Gustavo Petro of being an “illegal drug dealer” and authorised US military strikes on alleged drug trafficking boats in the region:

Von der Leyen and Merz are skipping the EU-Latin America summit to avoid “angering” Trump. Only 5 EU leaders attending.

This is what EU “strategic autonomy” looks like in 2025: cowering before Washington instead of building partnerships #euco https://t.co/JVghOJaqfn

— Alberto Alemanno (@alemannoEU) November 4, 2025

As we reported on Tuesday, Brazil, a country with an economy roughly one-eighth the size of the Euro Area, has created a publicly controlled real-time mobile payments system, dubbed Pix, that is essentially free to use for Brazilian residents and small businesses. It has been able to do this while significantly reducing its dependence not only on Visa and Mastercard’s global payment card duopoly but also the mobile payment apps of US tech giants.

The system has been so successful that it is now under investigation by the Office of the US Trade Representative, which accuses Brazil of giving preferential treatment to a government-developed electronic payment service. Brazil’s President Lula responded by rejecting any possibility of Pix being altered or privatised in order to benefit US financial interests.

“We defend Pix from any attempt at privatisation. Pix is from Brazil. It’s public, it’s free and it’s going to stay that way.”

Now, try to imagine Ursula Von der Leyen or Christine Lagarde doing the same.

Public Concerns

It’s not just Euro Area banks that are having serious reservations about the proposed digital euro; so, too, are EU citizens. In a recent survey carried out by BEUC, a European consumer organisation, 52% of respondents said they were afraid of losing the opportunity to use cash when (or if) the digital euro is implemented.

Interestingly, an overwhelming majority (85%) of respondents aged 14 to 17 said that all retail establishments should continue to accept cash despite the existence of more and more digital payment methods. Indeed, one of the main findings of the report is that there is still broad public support for cash across all age groups in the Euro Area.

This is backed up by recent ECB data we reported on a few months ago showing that demand for cash is rebounding in the Euro Area:

[C]ash use remains strong in the Euro Area despite the growing popularity of digital payments. While the overall share of cash payments at the point of sale (POS) has declined in recent years, it still accounted for 52% of transactions in 2024, according to the European Central Bank’s (ECB) 2024 Study on the Payment Attitudes of Consumers in the Euro Area (SPACE). That’s down from 59% in 2022 and 72% in 2019.

It’s still a surprisingly high figure, especially given the concerted efforts of cash’s legion of enemies (banks, payment processers, big tech, fintechs, governments, the EU Commission and, in some cases, the ECB) to impede its use. Cash also accounts for 39% of the total value of POS payments across the Euro Area, as the bottom bar in the chart below shows.

…

These trends counter the prevailing narrative of the past decade — that cash’s decline is as inevitable as it is desirable, and that a cashless economy is a matter of when not if. That belief was reinforced by the unprecedented explosion of e-commerce and contactless payments during the COVID-19 lockdowns. But that trend has slowed — and in some places, reversed — in the past couple of years.

Many have rediscovered — or in the case of many Gen Zers, discovered — the budgetary benefits of using cash at a time of sticky inflation. Geopolitical trends have led some of the world’s most cashless countries (Sweden, Norway, Finland…) to reconsider the wisdom of abandoning cash altogether while recent natural disasters and payment outages, including Spain’s recent one-day blackout, have shone a spotlight on the fragility of cashless economies and the vital role of cash as a contingency payment option.

While growing public opposition to a digital euro may be of concern to the ECB and Commission, especially given how little public debate has taken place around the issue, the greater concern will be the stubborn resistance from EU banks, particularly those in Germany. Since it began developing the digital euro, five years ago, the ECB has been trying to allay German misgivings about the digital euro, to no apparent avail.

On Tuesday, the German Banking Industry Committee, the country’s top banking lobby group, welcomed Navarette’s draft opinion on the proposed CBDC, calling current plans “too complex” and “too expensive”, warning that it offered “little tangible benefit for consumers”.

While there is no doubt that the EU’s commercial lenders are looking after their own skin, it is also true that the digital euro, like all CBDCs, offers little in the way of public benefit while posing huge risks to privacy, anonymity and other basic freedoms. It could also end up wiping out small, local banks and credit unions, which will not be able to cope with the added layers of regulatory costs, burdens and complexities while losing a large part of their deposit base.

As we warned back in 2022, the mass development and rollout of central bank digital currencies would represent (and this, I believe, is not hyperbole) a financial revolution that threatens to radically reconfigure the very nature of money itself, turning it into the perfect tool of centralised control. And let’s be clear: this will not be a bottom-up revolution. There are no European citizens marching in the streets calling for a digital euro.

The current rent extraction-based payment system is certainly far from perfect, unless of course you’re a bank, but it is a darned sight better than the traceable, programmable, token-based public-private system the ECB and Commission are trying to create.