EU to Find Common Ground on Digital Euro but Skeptics Remain Vocal

The breakthrough came during a meeting in Copenhagen attended by European Central Bank (ECB) President Christine Lagarde and European Commission Executive Vice-President Valdis Dombrovskis. The discussions aimed to calm fears that a central-bank-issued currency could drain deposits from commercial lenders.

Under the current blueprint, the digital euro would function as a smartphone wallet directly backed by the ECB’s balance sheet, reducing Europe’s reliance on U.S. payment networks such as Visa and Mastercard.

Lagarde described the initiative as more than a financial tool, framing it as a political statement to strengthen Europe’s sovereignty in payment infrastructure.

Skepticism persists, however. Fernando Navarrete Rojas, a member of the European Parliament and an economist at the Bank of Spain, warned that the project could threaten financial stability and data privacy while creating new regulatory burdens. In a recent policy paper, he called the proposal “a solution in search of a problem.”

Critics Question Need and Risks

Navarrete’s concerns reflect a broader unease among European policymakers and banking executives who fear that a widely adopted digital euro might siphon deposits from traditional banks, particularly in times of economic stress. By allowing consumers to hold central-bank money directly, critics argue, the initiative could accelerate bank runs during crises, destabilizing private lenders.