Seventy European economists have called on EU lawmakers to prioritize public interest over private-sector lobbying in shaping the digital euro, warning that poor design choices could leave Europe dependent on foreign payment systems and dollar-backed stablecoins. The open letter, published Sunday by Utrecht University’s Sustainable Finance Lab, comes as the European Parliament prepares to finalize legislation that will determine whether the digital currency becomes a meaningful alternative to private mone ...

The European Union has agreed on its negotiating position for legislation that would allow the European Central Bank to issue a digital form of the single currency, including an offline version designed to function without internet access. The decision does not authorize issuance, but it clears the way for negotiations with the European Parliament and brings long-running debates over privacy, resilience, and political oversight into sharper focus. Offline, Private, Digital: Is Europe Rebuilding Cash in ...

Core Viewpoint - The European Central Bank (ECB) is set to allow blockchain-based transactions to settle in central bank money starting in 2026, amid ongoing discussions about privacy concerns related to the digital euro [1][2]. Group 1: Digital Euro Development - The ECB is advancing technical work on the digital euro, which will serve as a digital cash equivalent across the euro area [2][3]. - The integration of blockchain systems into the financial infrastructure is a significant step towards modernizing Europe's monetary framework [2][3]. Group 2: Transaction Settlement - Transactions on distributed ledger technology (DLT) platforms will settle directly in central bank money, eliminating the need for private intermediaries [3]. - This approach aims to prevent market fragmentation and ensure that new digital asset ecosystems utilize a risk-free public settlement asset [3]. Group 3: Infrastructure and Safeguards - The digital euro infrastructure will be designed to interact with other central bank digital currencies, facilitating cross-border payments [4]. - Safeguards, including holding limits and the absence of interest payments, will be implemented to maintain the role of commercial banks in credit creation and monetary transmission [4]. Group 4: Legal Framework and Timeline - The ECB's technical preparations are nearing completion, with a readiness phase initiated after a two-year preparation period ending in October 2025 [5]. - The ECB requires a legal framework approved by EU lawmakers to proceed, with pilot transactions expected to start in mid-2027 if legislation is adopted in 2026 [6]. Group 5: Privacy Concerns - As the timeline for the digital euro becomes clearer, discussions around privacy have intensified, with the ECB asserting it does not support a programmable digital euro that restricts user spending [7].

European Central Bank officials said Thursday the institution is ready to roll out a digital euro after completing technical and preparatory work, confirming at this year’s final press conference that a review of the project is underway, with the European Council and the European Parliament participating. “We have done our work, we have carried the water, but it's now for the European Council and certainly later on for the European Parliament to identify whether the Commission proposal is satisfactory, how ...

European Central Bank President Christine Lagarde said Thursday the central bank has completed its technical and preparatory work on the digital euro and that it is now up to political institutions to act. The project, which aims to create a public digital means of payment, is under review by the European Council and the European Parliament. Her remarks came during the ECB’s final press conference of the year, where policymakers left the eurozone’s key interest rates unchanged. Lagarde reaffirmed the ECB ...

Core Viewpoint - The financial world is splitting into two competing models: government-led digital currencies and private sector stablecoins, with the latter gaining momentum faster than the former [1][3]. Group 1: Financial Models - The European Central Bank (ECB) is investing €1.3 billion to launch a digital euro by 2029, representing a centralized system where one authority controls monetary policy at the transaction level [3]. - In contrast, the U.S. GENIUS Act formalizes regulated, audited stablecoins backed 1:1 by real-world assets, promoting a distributed model that allows for competition and reduces risks associated with single-point failures [4][5]. Group 2: Regulatory Framework - The GENIUS Act establishes a clear regulatory framework for stablecoins, focusing on safety, transparency, and strict auditing requirements [5]. - Companies issuing USD-backed stablecoins must hold full 1:1 reserves in cash or short-term Treasuries, undergo regular public audits, maintain segregated assets, and register under a federal licensing regime [6]. Group 3: Market Dynamics - The private sector is advancing more rapidly than government initiatives, with companies like Revolut integrating blockchain technology for settlement, indicating a shift towards innovation in financial services [5].

Core Points - The European Central Bank (ECB) has been instructed by the European Council to expedite the development of the digital euro, a central bank digital currency (CBDC) [1][3] - If the European Parliament approves the necessary regulations in 2026, a pilot for the digital euro will occur in 2027, with a full rollout planned for 2029 [1][4] - Christine Lagarde, ECB president, emphasized the importance of the digital euro in digitizing cash and reducing reliance on physical currency [2][3] Development Timeline - The ECB is entering the "next and final phase" of the digital euro's development [2] - The European Parliament's approval in 2026 is crucial for initiating a pilot exercise and initial transactions by mid-2027 [4] - The formal release of the digital euro across Europe is targeted for 2029 [1][4] Financial Aspects - The total estimated development cost for the digital euro is €1.3 billion (approximately $1.5 billion) until its first issuance in 2029 [5] - Annual operating costs post-launch are projected to be €320 million (around $369 million) [5] Technical Characteristics - The digital euro will not utilize public blockchains for transactions but will incorporate key design principles from digital ledger technology [3] - Unlike stablecoins, CBDCs like the digital euro are issued by central banks and are distinct in their operational framework [3]

Core Viewpoint - A senior EU official advocates for the creation of euro-backed stablecoins to reduce reliance on U.S. dollar-pegged tokens in the global crypto market [1][2][3] Group 1: Need for Euro-Backed Stablecoins - The EU should not depend on U.S. dollar-denominated stablecoins, which currently dominate the market [2] - Stablecoins are seen as essential in the evolving financial landscape, and Europe must facilitate the issuance of euro-denominated stablecoins by domestic issuers [2][3] Group 2: Digital Euro Initiative - The digital euro initiative is gaining momentum, with the ECB potentially rolling it out by 2029 [5] - Recent discussions among euro area finance chiefs have been described as a "major breakthrough" in reaching consensus on customer holding limits to protect bank deposits [5][6] - The digital euro aims to reduce reliance on private payment companies and curb the influence of dollar-denominated stablecoins in Europe [6] Group 3: Support from EU Officials - Paschal Donohoe, president of the Eurogroup, supports financial innovation and highlights the potential benefits of the digital euro for regional commerce [4] - The European Parliament is expected to have a position on the legislative framework for the digital euro by early May next year [6] Group 4: Challenges Ahead - Several unresolved technical and policy questions remain, including privacy safeguards and the operational framework of the currency [7]

Core Insights - The euro is considered one of the EU's most significant achievements, having survived a sovereign debt crisis and undergoing extensive banking and monetary reforms over three decades [1][4] - There is a prevailing sense of policy inertia within the eurozone, with national divisions and competing priorities hindering progress on reforms [3][4] - European leaders are recognizing the need to bolster the euro's global status to protect their export-driven economies amid rising protectionism [8][9] Group 1: Euro's Global Position - The euro accounts for approximately 20% of global central bank reserves and trade invoicing, making it the second-most favored currency after the dollar [7] - The euro has appreciated around 13% against the dollar this year, reaching a four-year high, with expectations for further gains as the U.S. Federal Reserve cuts its benchmark rate [8] - There is a consensus that increasing the euro's presence in global trade and reserves could insulate the eurozone from exchange rate fluctuations and economic sanctions [9] Group 2: Challenges to Euro Reforms - Proposals for jointly issued euro-denominated debt to fund defense initiatives have faced resistance from major economies like Germany and France [2][16] - The lack of a deep and liquid capital market in the eurozone is a significant barrier, with the outstanding euro area bonds totaling around $13 trillion compared to the $30 trillion U.S. Treasury market [10][11] - Fragmentation of capital and banking markets across member states complicates efforts to create a unified capital markets union, which has been a long-standing goal [20][21] Group 3: Digital Euro and Future Prospects - The proposal for a digital euro has been stalled for over two years, with concerns about its potential impact on bank deposits and unclear objectives [25][26] - The earliest timeline for the digital euro's approval is mid-2026, with additional time required for technology development [27] - Despite resistance to necessary reforms, there is a belief that the euro can strengthen its position as the global number two currency, although it is unlikely to rival the dollar's dominance soon [29][30]

Core Insights - The European Union is initiating a year-end effort to enhance pension savings and tighten market oversight, potentially granting new authority to its Paris watchdog over crypto firms [1][2] Group 1: Pension and Market Reforms - The proposed package will include pension auto-enrolment, tax incentives for savings, and measures to reduce cross-border trading barriers [2] - The initiative, referred to as the EU's Savings and Investments Union, aims to mobilize household wealth and improve Europe's financial autonomy by integrating fragmented markets and increasing retail participation [3][6] Group 2: Supervision and Regulatory Framework - There is a consideration for centralized supervision of market infrastructures, including central counterparties and trading venues, particularly for rapidly evolving sectors like Crypto Asset Service Providers [3] - Any transfer of supervisory powers to the European Securities and Markets Authority (ESMA) is intended to create a collaborative oversight framework that manages cross-border risks and ensures consistent enforcement across the EU [4] Group 3: Digital Euro and Competitiveness - The discussions on pensions and market reforms are occurring alongside efforts to design a digital euro, with considerations on whether to utilize public blockchains like Ethereum or Solana [5] - The competitiveness of the euro in global finance is under scrutiny, especially in light of the U.S. advancing its first stablecoin law [5] - The development of deeper capital markets and stronger pension systems is viewed as essential for channeling long-term savings into the economy [6]