A new kind of cash: Europe’s quietly unfolding experiment with a digital euro
Walk into a bustling Dublin café on a rainy Tuesday morning and you’ll see the same choreography everywhere: a barista with a tattooed forearm, a queue of people tapping phones to a payment terminal, and the faint chime of three-word receipts. The future of money feels mundane—tiny, frictionless, invisible. Yet behind that casual tap lies one of the biggest financial experiments Europe has ever tried to stage: converting central-bank money—the sort you keep under a mattress or in a coin jar—into something that lives on your phone.
At the European Central Bank’s quiet offices in Frankfurt, and in ministries from Copenhagen to Lisbon, an idea that once sounded like a technocratic thought experiment has picked up speed. Officials speak of a “digital euro” not as a flashy cryptocurrency but as digital cash: instant, sovereign, and designed to sit alongside banknotes and coins. “If money is digital, central-bank money should be too,” said one senior policymaker to me, leaning forward over a cluttered desk. “It’s about keeping a public anchor in a world increasingly rented out to private platforms.”
Why now? Politics, payments and the power of platforms
The timing is not accidental. Rampant digitalisation of payments has knocked cash back across the continent: between 2019 and 2024 the share of payments made with cash at physical points of sale dropped from 72% to 52% by volume, and from 47% to 39% by value. Smartphones and contactless rules have already rewritten how Europeans spend. But there’s a second, less visible driver: geopolitics.
European officials are painfully aware that much of everyday card and wallet infrastructure depends on two American giants, Visa and Mastercard. In moments of geopolitical strain, private firms have shown they can pull services with little notice—a reality that gained renewed attention during the Russia-Ukraine conflict and in conversations about regulatory shifts in Washington. A pragmatic worry has taken root: what if a future geopolitical jolt left parts of the eurozone unable to process basic card payments?
“We are not trying to be anti-American,” said a eurozone finance official, who asked not to be named. “We are trying to be resilient.”
How will it work—wallets, limits and offline use
The blueprint being sketched is simple on paper, fiendishly complex to deliver. Citizens would open a digital-euro wallet via their bank, post office or another regulated provider and load it from a regular account. The money in that wallet would be central-bank money—just like the euro cash in your pocket—rather than a commercial bank deposit or a dollar-pegged stablecoin issued by a tech firm or fintech.
That last difference is the point. “A euro kept in an ECB-backed digital wallet is not a claim on a bank,” explained Dr. Ana Ferreira, a payments researcher. “It’s a liability of the central bank—so it changes the risk landscape.”
To preserve the role of commercial banks in lending, officials plan to cap how much an individual can hold in a digital wallet. Early discussions floated a figure of around €3,000 per person; simulations using that limit showed that, in a hair-raising worst-case scenario where everyone shifted the maximum from bank deposits into wallets, about €700 billion could move out of banks—roughly 8.2% of retail deposits. The modelling suggested that under extreme stress a handful of smaller banks might see buffer levels squeezed dangerously low.
“In the digital age bank runs can happen faster than ever,” warned a member of the European Parliament’s economic committee. “It’s like a fire spreading through a dry forest—if the conditions are right.”
Planners say the alarm scenario is improbable. For the wholesale transfer to occur, every consumer across the euro area would have to act in the same way at the same time. Still, the exercise has sharpened policy debates about limits, emergency liquidity backstops and the role of deposit insurance.
Practical features are under discussion too. The ECB insists the digital euro should work even when the internet does not. During an Iberian blackout this spring—when digital payments briefly failed—consumer spending in affected regions plunged by 42% and online commerce fell by 54%. Officials now emphasise an offline option: secure near-field communication (NFC) between devices, essentially letting phones behave like physical cash when networks are down (so long as the battery holds).
Privacy, surveillance and the promise of near-anonymity
Perhaps the thorniest debate is about privacy. Cash has a moral aura in Europe—the freedom to transact without intermediaries logging every purchase. Could the digital euro preserve that? Policymakers have pitched the project as “almost as private as banknotes,” though not completely anonymous. The tension is real: anti-money laundering rules demand visibility for suspicious flows, but citizens rightly expect some degree of privacy for everyday spending.
“You don’t want a central ledger that can be rummaged through by the state or monetised by corporations,” said a civil-society campaigner. “At the same time, nobody wants the payment system to become a haven for criminal finance.”
Who will accept it, and who will pay?
Adoption will hinge on a mundane but existential question: will merchants pick it up? The European Commission has even suggested merchants who accept commercial card payments should offer the digital euro too. Cost is a battleground. A PwC estimate suggested deployment might cost up to €2 billion per bank—or as much as €18 billion across the eurozone. The ECB’s counter-calculation is considerably lower, pegging total costs in the single-digit billions over several years.
In Ireland, where contactless mobile wallets have surged—some 60% of contactless transactions in the first half of 2025 used mobile wallets—consumers prize speed and low friction over ideological purity. “I don’t care if it’s called the digital euro or the shiny coin,” laughed Siobhán from Cork, tapping her phone at a bakery counter. “Just don’t charge me to buy my bread.”
Beyond payments: sovereignty, stablecoins and the global stakes
The digital euro is not only about domestic convenience. It is also defensive: a way to blunt the rise of privately issued stablecoins—digital tokens pegged to currencies whose global supply has grown toward the hundreds of billions of dollars. If a private provider were to launch a euro-equivalent and it failed, the reputational damage to the euro could be substantial. “If the ECB doesn’t provide a safe public option, the market will,” said Rebecca Christie, a European policy analyst. “And that could be messy.”
So where does this leave us, the people who actually spend and save? For most Europeans, the digital euro will land as a background feature: an app, a wallet, a silent switch when you tap for coffee. For policymakers, it is a massive institutional project that ties together technical engineering, legal safeguards and political bargaining across 20-ish economies and thousands of banks.
Will it give citizens more control over their money—or simply move control from banks to a central ledger? Will it strengthen Europe’s autonomy in a shifting geopolitical map, or will it entangle personal privacy in new ways? Those are the questions that policymakers, shopkeepers and ordinary savers must decide together.
In the end, the success of the digital euro will not be decided in a boardroom in Frankfurt but at the counter of that Dublin café, when a customer asks, “Do you take the digital euro?” and the barista replies, “Of course.” How that “of course” sounds—hesitant, pragmatic, or enthusiastic—will be the true measure of this experiment.