The European Central Bank (ECB) and the geoeconomics of the digital Euro

Central banks worldwide are considering the possibility of introducing central bank digital currencies (CBDCs). Among central banks of the Global North, the European Central Bank (ECB) has been a frontrunner in this area by beginning the preparation phase to issue a retail CBDC – the digital euro. We argue that the digital euro has been considered by the ECB as an instrument to safeguard the «monetary and financial sovereignty» of the euro area in an increasingly digitised economy. Specifically, the ECB worries about the potential widespread uptake of cryptocurrencies issued by private companies, generally based outside the European Union (EU), as well as the existing dominance of non-EU private actors in retail payments. Currencies and payments are public goods that underpin all other economic and financial activities and that can be weaponised by non-EU players. Moreover, this development suggests the ECB has become a geoeconomic actor in its own right.