Alternatives to the digital euro

Plans to introduce a digital euro are becoming increasingly concrete. The European Parliament is expected to vote on the proposal in May 2026, with the European legislative process set to be completed by the end of the year. However, the digital euro is likely to be primarily a prestige project of European institutions, whose benefits are difficult to discern. Its introduction would, with a high degree of probability, entail distortions of competition and risks to the financial system. It could also lead to a gradual displacement of cash, quietly driven forward by the various interested parties. Contrary to the expectations of its proponents, the digital euro is also unlikely to significantly foster technological progress or strengthen the euro's role as a global reserve currency. For this reason, an open-ended process without time pressure is needed-one that allows for the possibility of ultimately deciding against the introduction of a digital euro. Instead, alternative options should be incorporated into the decision-making process. In addition to the possibility of entrusting the ECB with the provision of digital infrastructure, priority should be given to private initiatives in the development of digital payment services. One point appears clear: Europe's shortcomings and dependencies in digital payment systems cannot be resolved through a more or less state-driven digital currency, but rather require trust in market-based processes and openness to private innovation.