Europe Bets on Digital Euro to Reclaim Cash’s Lost Trust

The European Union is advancing its plans for a digital euro, seeking to preserve the role of public money in an increasingly cashless and digital era, even as it navigates the implications of the U.S. GENIUS Act, which has established the first federal regulatory framework for stablecoins. The digital euro initiative aims to complement physical cash with a digital form of central bank money that is secure, private, and universally accessible. According to ECB Executive Board member Piero Cipollone, the project is driven by the need to ensure that the public retains a trusted and neutral payment option in the face of growing reliance on commercial and foreign payment systems [3].

With the share of cash in eurozone payments falling from 68% in volume in 2019 to 40% in 2024, the ECB is concerned about the erosion of consumer choice and the increasing dominance of non-European platforms in digital transactions. A digital euro would address these concerns by providing a public infrastructure that is free to use and available both online and offline, even in emergencies such as power outages or natural disasters [3]. The ECB envisions the digital euro as a retail payment tool accessible through digital wallets, with the potential to enhance financial inclusion and strengthen the euro’s relevance within the European economy [3].

Discussions about the technical and legal framework for the digital euro are ongoing, and the ECB’s preparation phase is set to conclude in October 2025. Following that, political and legal decisions must be finalized before the development phase begins, which is expected to last between two and three years. This timeline suggests a potential launch window between 2027 and 2029 [3]. During the development phase, the ECB will determine key design features, including holding limits and the integration of privacy safeguards. Notably, the ECB has clarified that user privacy will be protected, and it will not track individual transactions or hold personal data [3].

The digital euro initiative is not intended to challenge the global dominance of the U.S. dollar. Instead, it focuses on reinforcing the euro’s role as a stable and trusted form of payment within the European market. The U.S. dollar remains the leading global reserve currency, accounting for over 53% of allocated global reserves in the first quarter of 2025, compared to the euro’s 20.06%. While the euro’s global standing continues to grow, it still lags behind the dollar in areas such as trade, commodity pricing, and cross-border lending. The ECB has emphasized that the digital euro is a domestic tool designed to meet the needs of European consumers and merchants, rather than a geopolitical instrument [3].

The EU’s digital euro project is being considered alongside a broader global trend of digital currency development. In the U.S., the passage of the GENIUS Act has provided a regulatory foundation for stablecoins, enabling private sector innovation. Major companies are also exploring the issuance of their own stablecoins, as seen with MetaMask’s recent launch of MetaMask USD, a self-custodial stablecoin integrated into its ecosystem [1]. These developments highlight the growing role of digital currencies in the global financial landscape, though the EU’s focus remains on ensuring public control and trust through its central bank-issued digital euro [3].

Source:

[1] MetaMask announces stablecoin, MetaMask USD (https://metamask.io/news/metamask-announces-stablecoin-metamask-usd)

[2] Stablecoin summer (https://www.goldmansachs.com/insights/top-of-mind/stablecoin-summer)

[3] 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)