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More than 60 economists have implored EU parliamentarians to back the digital euro, warning the Eurozone would “lose control” of its own money and become more dependent on US companies were the project to fail.
“A strong public digital euro is not a nice-to-have, it is an essential safeguard of European sovereignty, stability, and resilience,” the economists, including French academic Thomas Piketty, argue in an open letter to MEPs ahead of a European parliament hearing on the subject next week.
The European Council has supported the European Central Bank’s plan to launch an electronic equivalent to cash by 2029. But it is unclear if the proposal will receive the necessary backing by a majority of the European parliament in a crucial vote later this year.
The 68 signatories of the open letter, who also include European academics such as France’s Eric Monnet, Germany’s Jan Pieter Krahnen and London-based Daniela Gabor, argue the region is overly dependent on US-based digital payments services, potentially exposing it to “geopolitical leverage, foreign commercial interests, and systemic risks beyond Europe’s control”.
Thirteen euro area countries lack any domestic digital payments option, the economists point out, and rely “entirely on international card schemes” such as Visa, Mastercard and PayPal.
Without naming US President Donald Trump, the letter refers to “recent developments” that have made such risks “more than a hypothetical”.
“Europe will lose control over the most fundamental element in our economy: our money. A robust public digital euro is our only defence,” they write in the letter sent to the 720 members of the European parliament on Friday and seen by the FT.
Europe’s banking industry has been lobbying to scale down the digital euro project. In November, 14 of the region’s biggest lenders, including Deutsche Bank, BNP Paribas and ING, warned that the digital euro could undermine private sector efforts in Europe to rival US payment systems.
Germany’s Banking Industry Committee, the country’s top banking lobby group, has called the ECB’s plans “too complex” and “too expensive”, warning that it offered “little tangible benefit for consumers”.
Fernando Navarrete, a conservative MEP from Spain appointed by the European parliament to assess the digital euro, has also argued for a significantly scaled-down version of the project.
The 68 economists urge EU policymakers to “resist the shortsighted financial lobby”.
The open letter was initiated by Utrecht-based academic think-tank Sustainable Finance Lab and Dutch-based Triodos Bank, a sustainability-focused lender that is supporting the ECB’s plan.
Triodos chief economist Hans Stegeman, who is among the letter’s signatories, said he thought other banks were concerned that they might lose a fair chunk of deposits from retail clients, who currently represent a cheap and predictable source of funding.
Under current plans, each individual would be able to hold up to €3,000 in their digital wallet. This money would not be available as a cash deposit for private-sector banks.
“We want to have a financial system that serves society and not the other way around,” Stegeman said, adding that a public electronic payments system was an important component of that.