The digital euro is coming - debunking the myths

"The digital euro is not privacy by design" 

"It will replace cash" 

"It will eliminate the role of commercial banks"

If you have been following the debate on the digital euro, you have probably come across at least one of these pieces of misinformation.

Private banking and crypto-lovers both have a strong incentive to cast the digital euro as a threat to your privacy, your freedom, and the way you use your money.

Positive Money Europe believes money is and should remain a public good. That is why we challenge the banking industry’s costly lobbying efforts that spread misleading claims and fears about the digital euro.  

Let's debunk these myths!

Myth 1: “The digital euro is not the real digital equivalent of cash - cash is anonymous, has no holding limits, works without infrastructure, and does not rely on an intermediary”.

This comparison overlooks the purpose of the digital euro. 

It is not intended to replicate every characteristic of physical cash, rather, provide a digital alternative that preserves the four core public values of cash in an increasingly digital economy. The digital euro can work offline, provide instant settlement, offer a safe form of public money that is free of charges, and help anchor the stability of the monetary system because it is a direct liability of the central bank. 

Citizens would have a safe digital store of value in an increasingly uncertain world. Banknotes are used less frequently for everyday purchases but the total amount of cash in circulation continues to increase in the euro area. This reflects the enduring trust that people place in central bank money during times of uncertainty - the war in Ukraine, for example, saw demand for cash rise significantly in neighbouring countries. 

Just like cash, the digital euro would be legal tender, meaning merchants that are already equipped to accept digital payments would have to accept it. 

Like cash, the digital euro will be available for offline payments directly from one device to another - using either a smartphone or a payment card - without requiring an internet connection. Secure hardware would allow transactions to continue even when communication networks are unavailable like in major emergencies.

This resilience was lacking during the major power outage in Spain and Portugal on 28 April 2025, when many digital payment services were temporarily disrupted - card payments (-55%), cash withdrawals (-34%), Bizum payments (-75%) (peer-to-peer banking money transfers through banking app) - illustrating how dependent modern payment systems are on electricity. 

There are also misplaced concerns about the privacy of  digital euro payments. The reality is that the payment system would process only the technical information strictly necessary to complete the transaction - such as the payer's and recipient's codes as well as  the amount transferred. For offline payments there's no payment system, all data are processed locally

Myth 2: "Without holding limits, the digital euro will replace bank deposits and threaten financial stability".

The digital euro would not carry interest, meaning it is designed to function as a means of payment rather than an investment or savings product. So why should we expect a permanent, large-scale shift of savings away from commercial banks? The debate around the holding limit’s ceiling is nevertheless important - they should be re-evaluated by the European Commission based on a recommendation of the ECB (non-binding), with the possibility for the Council and the European Parliament to veto it. Although the re-evaluation is not subject to the European Parliament requests, it was the Parliament that suggested the idea of a review after two years - which is still uncertain and will depend on the trilogues outcomes.

The banking sector seems to fear that, during periods of financial stress, customers could rapidly transfer deposits into the digital euro which they say would create less deposit funding or central bank refinancing - potentially raising their funding costs. This does not necessarily mean that the digital euro would weaken the banking system, instead when households move funds from commercial bank deposits into digital euro holdings, commercial banks lose deposits, but the central bank gains them. 

Holding limits can be compared to cash withdrawal limits, in that both restrict access to a form of money. But withdrawal limits are set unilaterally by banks, through their own contractual and operational terms, with no public oversight - whereas holding limits will be set through a legislative process. This is arguably a good thing: it means the level is subject to democratic scrutiny rather than being decided behind closed doors. But it also means that process needs to stay transparent and evidence-based, not shaped by commercial banks' interest in protecting their deposit base. Holding limits should not become an instrument for restricting the digital euro in order to protect commercial banks. As trust in the digital euro grows and its impact on financial stability is tested in practice, we hope to see holding limits reassessed and gradually raised, so the digital euro can become a genuinely useful means of payment for everyday needs.

In practice  the so-called waterfall feature will allay usability concerns. Should a user wish to make a payment that exceeds the balance in their digital euro wallet the difference would be automatically transferred from the user's linked commercial bank account. This process will be tested as part of the Eurosystem's digital euro pilot.

A digital euro could actually encourage a healthier banking sector. If citizens have access to a genuinely safe public digital payment instrument, commercial banks may have stronger incentives to compete by offering more attractive interest rates on deposits and by relying more on longer-term sources of funding rather than cheap, stable retail deposits. Such a development could ultimately contribute to a more resilient financial system while preserving the central role of banks in financing the real economy

Myth 3: “The digital euro is not privacy by design because it still relies on technical infrastructure, legal safeguards and trust in public institutions”.

The digital euro has been designed to minimise the collection of personal data while operating within one of the world's strongest legal frameworks for data protection including the General Data Protection Regulation (GDPR) and the EU Data Protection Regulation (EUDPR),much more than many existing digital payment solutions offered outside Europe.

The digital euro will also not be “programmable money”. The ECB will not be able to decide how, when or where citizens spend their money, nor restrict purchases based on the type of goods or services. Privacy protections are built directly into the technical design. For online payments, only the information strictly necessary to process the transaction is shared, using pseudonymisation and encryption. As France's data protection authority (CNIL) noted, the ECB is effectively "blind by design".

Another argument frequently raised by the banking sector concerns the cost of implementing the infrastructure. Some banking associations have estimated the costs up to €18 billion (PWC) to €50 billion (FBF), while the ECB disagrees and estimates €4 to €5.8 billion. In practice, the digital euro would reuse much of the existing payments infrastructure rather than replace it entirely. A legally accepted, pan-European payment network would even lower barriers to entry for new payment providers and fintech companies. 

Myth 4: “The digital euro does not solve any consumer issues”. 

This overlooks one of the biggest weaknesses of Europe's current payment landscape: fragmentation and dependence on non-European payment infrastructures.

Today, European citizens do not benefit from a truly unified European digital payment system. While initiatives such as Wero are emerging as private alternatives, they remain limited to certain Member States and remain private. Meanwhile, 13 out of 21 euro area countries are entirely reliant on international payment schemes, largely operated by non-European companies. The digital euro would create a legally recognised, universally accepted public digital payment rail available across the entire euro area, strengthening Europe's strategic autonomy in payments.

The digital euro would also address practical barriers faced by consumers. It would be free of charge for basic use, ensuring that access to public money is not dependent on a person's income or banking status. It would provide all residents with a secure means of payment backed by the central bank, including those who are most vulnerable.

The digital euro would also strengthen the resilience of Europe's payment system. In an increasingly digital and centralised financial environment, dependence on complex electronic infrastructures creates vulnerabilities. By offering an offline functionality and a payment system backed by public institutions, the digital euro would provide an additional layer of resilience during technical failures, cyber incidents, or other disruptions. This question is particularly relevant in the context of privately issued stablecoins. While stablecoins are often presented as faster, more decentralised alternatives, most existing stablecoins are backed by the US dollar, creating potential risks for Europe's monetary sovereignty. 

Conclusion: The digital euro is not about replacing cash or banks - it is about choosing what kind of monetary future Europe wants.

The debate around the digital euro is often presented as a question of technology: but the deeper question is political and societal.

The digital euro could become a concrete and effective European alternative to increasing dependence on non-European payment infrastructures and privately controlled digital currencies. It could strengthen Europe's monetary sovereignty while preserving competition and innovation in the private sector.

Ultimately, the success of the digital euro will depend on how it is designed. The fundamental question is therefore not simply "Do we need a digital euro?" but rather: "In an increasingly digital economy, who should we trust to provide the foundations of our money system - private interests or public institutions?".