Ethereum News Today: Europe’s Digital Euro: A Shield for Sovereignty in a Digitized World

The European Union is accelerating its development of a digital euro as part of a broader strategy to reduce dependency on U.S. dollar-backed stablecoins and to preserve the role of public money in a rapidly digitizing economy. The European Central Bank (ECB) has identified the growing use of private payment systems—many of which are controlled by non-European entities—as a threat to the eurozone’s financial sovereignty and consumer choice. According to ECB Executive Board member Piero Cipollone, the digital euro is not intended to challenge the U.S. dollar globally but aims to protect the euro’s role in domestic transactions, support financial inclusion, and safeguard monetary sovereignty [1].

The ECB is currently in the preparation phase of the digital euro project, with a timeline that places its potential launch between 2027 and 2029. The initiative is driven in part by concerns over the dominance of U.S. dollar-pegged stablecoins in the global stablecoin market, which accounted for approximately 98% of the $160 billion in circulation as of early 2025 [2]. ECB officials have cited the recent passage of the U.S. GENIUS Act as a significant development that has intensified the urgency for the EU to act. This U.S. legislation provides a regulatory framework for dollar-backed stablecoins, potentially giving U.S. platforms an edge in global finance and reinforcing the dollar’s dominance [4].

In response to the U.S. and China’s approaches to digital currency, the EU is exploring the use of public blockchains, including Ethereum and Solana, as potential platforms for the digital euro. This shift from a private blockchain model represents a strategic pivot toward open, transparent, and scalable infrastructure. Officials have noted that a public blockchain would align more closely with the open financial systems developed by U.S. firms, rather than the closed, permissioned systems used in China’s central bank digital currency (CBDC) [2]. While the ECB has not yet finalized its technology framework, officials have acknowledged the advantages of public blockchains in terms of interoperability, accessibility, and transparency [4].

The digital euro is designed to function similarly to physical cash, offering privacy, instant transactions, and offline usability. Users would access the digital euro via a digital wallet, likely provided by banks or public authorities. Funds could be loaded from traditional bank accounts or physical cash, with transactional privacy ensured by limiting the ECB’s ability to track individual spending [1]. A key objective of the digital euro is to maintain the neutrality and universality of public money in the face of growing dominance by private payment providers, especially in cross-border and digital transactions [1].

Economists, including Filippo Taddei of Goldman Sachs, have highlighted that cash still holds significant value in the eurozone, particularly among small and medium-sized enterprises. The digital euro could help preserve this liquidity and ensure continued access to a neutral, public payment option. The ECB also emphasizes the potential of the digital euro to support merchants by fostering competition and reducing fees in the payments sector [1].

Source: [1] Cash is king: Why does the eurozone need a digital euro? (https://www.euronews.com/business/2025/08/20/cash-is-king-why-does-the-eurozone-need-a-digital-euro) [2] EU exploring Ethereum, Solana for digital euro launch: FT (https://cointelegraph.com/news/europe-mulls-ethereum-solana-digital-euro-launch) [3] Cash is king: Why does the eurozone need a digital euro? (https://finance.yahoo.com/news/cash-king-why-does-eurozone-050203228.html) [4] EU Eyes Ethereum and Solana for Digital Euro in Race ... (https://coinlaw.io/eu-digital-euro-ethereum-solana/)