Talks aimed at creating a digital euro are entering their final stage in the EU’s institutions. Paul Schmidt and Miguel Otero-Iglesias write the digital euro could significantly reduce dependence on US companies and lower payment fees, but it will be vital to use effective communication to address public concerns about the project.
Since its introduction as cash nearly 25 years ago, the euro has developed into a symbol of European identity. Today, almost 360 million people in 21 EU member states use the common currency. The euro is also legal tender in Monaco, Andorra, San Marino and the Vatican City. Kosovo and Montenegro adopted it unilaterally, and more recently Hungary’s new Prime Minister, Péter Magyar, announced that he intends to examine the possibility of replacing the Hungarian forint with the euro.
The euro has made Europe “tangible” for everyone in their daily lives: first, as cash in people’s pockets, but also sometimes carrying the can for perceived shortcomings of European integration and as a scapegoat for member countries’ economic mismanagement.
Nevertheless, the euro, as the currency of the European Union, is highly valued today. According to Eurobarometer data, three out of four Europeans are in favour of it – in Austria, support stands at 71 percent, in Spain it reaches 87 percent. Even in EU countries that have not yet adopted the euro, its image is often surprisingly positive, especially in Hungary and Romania, while public opinion in Poland and the Czech Republic remains rather sceptical.
In times of crisis and global instabilities, a stable currency that contributes to greater independence and resilience is paramount. Acceptance of the euro therefore extends well beyond the euro area and the European Union itself. In many countries of Central, Eastern and Southeastern Europe, the euro enjoys a high level of trust – often higher than the respective national currency – and is widely used as a means of saving and as a store of value.
This is also relevant for potential future rounds of EU enlargement. To qualify for EU membership, candidate countries must not only demonstrate that they can comply with the rules of the European Economic and Monetary Union – they are also obliged to adopt the common European currency at a later stage after becoming EU members.
The digital euro
Yet, today’s payments landscape is entirely different from what it was 25 years ago. The trend toward ever more digital and non-cash payments, with roughly two-thirds of such transactions in the EU now processed through international card payment systems, has created substantial dependencies on non-European payment service providers, led to significant profit outflows, raised concerns about inadequate data protection and reduced the symbolic visibility of the euro itself.
This is why negotiations are now taking place in the EU’s institutions over the creation of a digital euro capable of addressing these gaps. By complementing cash, the digital euro would provide a secure, socially inclusive, free and uniform payment method across Europe, while also including offline functions to ensure cash-like privacy levels. The EU institutions are expected to reach an agreement on the specificities of the project by the end of the year, with the digital euro’s full rollout across the eurozone ready in 2029.
Central bank digital money is not an exclusively new European idea. According to the Atlantic Council, around 146 countries worldwide are working on introducing a digital equivalent of cash. For European businesses, especially retailers and small enterprises, the planned payment alternative could generate substantial cost savings through a significant reduction in card fees.
If EU candidate countries were allowed to take certain integration steps already before their official EU accession to speed up the EU’s slow enlargement process, the digital euro could play an important role. Its introduction offers an opportunity to bring EU member states and candidate countries closer together more quickly, digitally anticipate the expansion of the eurozone and thereby contribute to both the acceleration and deepening of European integration.
In the Western Balkan countries, for instance, where the euro is already widely used, the dominance of international credit cards is even more pronounced than within the EU itself. With the prospect of secure and free transfers, the digital euro could gain significant traction.
Millions of people living in the EU have roots in candidate countries and their remittances constitute an important source of support for families back home, accounting for a substantial share of economic output in some countries. In Kosovo, for example, they amounted to more than 17 percent of GDP in 2024. Altogether, 52.1 billion euros in remittances were transferred from the EU in that year.
Countering scepticism
A digital euro would also be appealing as retail money to citizens of EU countries that have not yet adopted the euro and could, for purely practical reasons, further strengthen the position of the common currency. Although the use of the new payment instrument is initially planned for the eurozone itself, public pressure to make it available in non-euro countries will be considerable.
However, for many, the digital euro still remains a big unknown. This has been exploited by many critical voices who depict it as another example of European elites taking over, the end of cash payments in general and “a further means to infringe on citizens’ privacy”.
To alter its image, information and communication is key. It would therefore be premature to portray the digital euro as a possible game changer for European integration. Yet, given the growing importance of digital payments and its practical benefits, the digital euro undoubtedly has the potential to take the identity-building role of the common currency into a new era and add momentum to the integration project.
But first, it must prove itself in practice. Above all, it must be designed in such a way that it can be used easily by everyone either via a smartphone or a physical card.
Paul Schmidt is Secretary General of the Austrian Society for European Politics. He is co-editor of the book series, “The Future of Europe: views from the Capitals”. Miguel Otero-Iglesias is a Senior Fellow at the Elcano Royal Institute in Madrid and a Professor at the IE School of Politics, Economics and Global Affairs. Dieser Beitrag erschien im Rahmen der Publikationsreihe LSE Blogs der London School of Economics and Political Sciences.
