ECB Digital Euro Plan Meets Resistance

ECB digital euro plan meets opposition from banks and EU lawmakers

The European Central Bank’s effort to launch a digital euro by 2029 is facing resistance from senior EU lawmakers and major banks, who warn that the project risks undermining private sector payment systems.

Ahead of a parliamentary hearing on Wednesday, fourteen lenders including Deutsche Bank, BNP Paribas and ING said the digital currency proposed by the ECB overlaps with existing private solutions and offers little clear benefit to consumers. The group of banks is backing Wero, a European payments platform designed to challenge dominant US providers such as Visa, Mastercard and PayPal.

In a joint statement, the banks said the current design of the digital euro targets the same use cases as commercial alternatives and questioned whether taxpayers should fund a public system that competes directly with private companies.

Fernando Navarrete, a Spanish conservative MEP appointed to assess the plans, has called for a significantly reduced version of the project. His report, published last week, argues that the digital euro should be limited to offline use as a substitute for cash, rather than being deployed as a full online payments tool. Allowing online payments, he warned, could create a parallel ecosystem that prevents private sector platforms from achieving European scale.

The ECB began work on a central bank digital currency in 2020. Last week its governing council said it would take the steps needed to be ready to issue the first digital euros in 2029, with a pilot scheduled for 2027. The European Commission proposed legislation in 2023 to provide the legal basis for the project. Current rules only permit the ECB to issue physical cash, so any move to introduce a digital euro requires approval from EU governments and the European Parliament.

Supporters of the plan argue that falling cash usage and the dominance of US payment companies have created strategic vulnerabilities for Europe. ECB executive board member Piero Cipollone has said the digital euro is needed to safeguard the region’s monetary autonomy. In-store cash use fell from 72 per cent to 52 per cent between 2019 and 2024, while stablecoins backed by large US companies have grown rapidly.

Eurozone finance ministers gave the project their backing last month and urged lawmakers to approve the necessary legal changes. They said the development of the digital euro had made steady progress and argued that Europe needed to keep pace with international advances in payments technology.

Navarrete’s stance has divided parliament. Social democrats, liberals and greens support the ECB’s proposal, as do many members of his own conservative group. The German Banking Industry Committee welcomed his assessment on Tuesday, describing the current plans as too complex and too costly, with limited benefits for households and businesses.

Banks have raised concerns about the financial impact of the project. A PwC study commissioned by the industry estimated that a digital euro could cost banks up to 30 billion euros. The ECB disputes that figure, putting the cost closer to 6 billion euros.

One senior central bank official said Europe’s fragmented payments landscape remained a long-standing challenge. Even if a private sector alternative such as Wero succeeds, the official warned that ownership structures can shift over time. Visa Europe, once a domestic network, was eventually sold to its US parent, highlighting the difficulty of maintaining long-term control of strategic infrastructure.

With legislative negotiations still at an early stage, the future of the digital euro remains uncertain. The ECB insists the project is essential to strengthen Europe’s monetary sovereignty, while critics argue it risks duplicating private initiatives at significant cost. The coming months will determine whether lawmakers support the central bank’s vision or push for a narrower, more limited digital currency.