From Cash to Code: Shaping the Future of Digital Money in Europe
The digital euro should be seen as more than a monetary instrument. It is a social experiment in how Europe can combine technological progress with democratic legitimacy to deliver digital infrastructures at scale. A commentary by Claudio Tebaldi
Much of the current debate around the digital euro has been framed as if it were a solution in search of a problem. But this view risks missing the real point.
A digital euro is not about patching an existing deficiency in our monetary system; it is about shaping the future of money in a digital economy. The emphasis, therefore, should be less on the word money and more on the word digital.
We are entering an era where digital infrastructures permeate every aspect of economic life, from production networks and supply chains to consumer platforms and data-driven services.
In such an environment, digital money is unavoidable. It is the natural corollary of the digital economy. The question is not whether it will exist, but in what form and under whose governance it will evolve. Europe cannot afford to stand idle while other jurisdictions move forward.
When discussing the digital euro, it is useful to distinguish between wholesale and retail uses. Wholesale applications—those related to interbank settlement, financial market infrastructure, and cross-border payments—are relatively uncontroversial.
Many stakeholders acknowledge their potential to increase efficiency, transparency, and resilience. Yet the debate often becomes more contested once the word “retail” enters the picture.
Here, however, we should be careful.
The very term “retail” is misleading: a large share of the retail transactions is in fact business-to-business (B2B). This means that a retail digital euro is not just about consumers buying goods in shops; it is also about companies paying suppliers, service providers, and contractors.
This perspective matters because delaying innovation in the retail digital space risks creating contagion effects that slow down the broader development of digital services. Europe cannot afford such inertia.
A retail digital euro would be an essential stepping stone to recovering Europe’s digital competitiveness in the financial sector and beyond.
There is also a strategic dimension. European financial institutions are, on average, too small to invest at the scale required to counteract global “private” solutions, such as those that are made possible in the United States under initiatives like the Genius Act.
Europe lacks homegrown tech giants that can match the resources and reach of their American or Asian counterparts.
Without coordinated action, it is highly likely that European firms will find themselves dependent on foreign infrastructures, thereby undermining both competitiveness and sovereignty, forced to accept technological standards, governance models, and financial infrastructures designed elsewhere, often with priorities that diverge from our own.
A public digital euro would be embedded in Europe’s institutional and legal framework, ensuring accountability, inclusiveness, and respect for fundamental rights. And most importantly, the final decision must rest with Europe’s democratic institutions.
The European Parliament and the Council, as representatives of citizens and member states, must ultimately approve the framework and design. This is not a matter to be left to experts or technocrats alone.
That is why the digital euro should be seen as more than a monetary instrument. It is a social experiment in how Europe can combine technological progress with democratic legitimacy to deliver digital infrastructures at scale. Crucially, it is not designed to replace cash.
Physical cash will remain available as legal tender. Rather, the digital euro extends into the digital space the qualities that make cash valuable: universal acceptance, ease of use, privacy, and trust. It ensures that citizens and businesses can continue to rely on a public form of money, even in an economy that is increasingly digital.
What is at stake is more than just financial efficiency. A well-designed digital euro can anchor Europe’s sovereignty in the digital age, foster innovation in financial services, and support the competitiveness of European firms.
It can provide a trusted public alternative to private solutions, ensuring that the rules of the game are set not by the strongest corporate players or foreign governments, but by institutions accountable to European citizens.
If successful, it would give Europe not only technological leadership but also leadership in socially sustainable innovation. To achieve this, however, Europe must avoid reducing the debate to fears and simplistic narratives that treat the digital euro as either a threat or a panacea.
Being active in this space does not mean being technocratic; it means engaging openly in democratic discussion, while at the same time ensuring timely delivery.
History also offers important lessons. Across Europe, museums of money remind us that economic development has been built on centuries of monetary evolution, often marked by crises and upheavals.
From these episodes, one truth emerges: anticipating change is always wiser than resisting it.
The history of money is, in many ways, the history of societies adapting their institutions to new technological and economic realities. The digital euro belongs to this lineage. It is not an abandonment of our traditions but a continuation of them, rooted in the wisdom to anticipate change rather than be overwhelmed by it.
Ultimately, doing so requires courage. It requires mobilizing public and private actors in a common project, with the awareness that Europe’s size and fragmentation are constraints but also that Europe’s institutional capacity and democratic legitimacy are assets.
In short, the digital euro is not a solution to a problem we do not have. It is a step toward a future we cannot avoid.
Claudio Tebaldi is one of the organizers of the upcoming conference The Future of Payments: CBDC, Digital Assets and Digital Capital Markets, to be held on 25–26 September at Bocconi University. The initiative is jointly organized by Bocconi University (Baffi Centre), CEPR, and the European Central Bank, in collaboration with the Review of Finance. The program and registration form are available here.
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
