Digital Euro: High Costs With No Apparent Benefits

The ECB has embarked on an uncertain path with the digital euro project. It is pursuing a strategy that is unclear about what problems it is trying to solve and what specific goals it is trying to achieve. The ECB has not yet been able to diagnose a clear market failure that would justify such far-reaching government intervention. The attempt to claim the need for a “monetary anchor” instead is not very convincing. The current design is unlikely to attract much interest from citizens and thus will not contribute to greater European strategic autonomy in the payment system. This requires a solution that does not rely on system-specific balances and is therefore more convenient, while simultaneously avoiding impending risks to the financial system.