The European Central Bank’s (ECB) plans for a digital euro are facing increasing scrutiny, with prominent economists questioning the rationale and potential implications of the initiative. Former ECB advisor Peter Bofinger has launched a sharp critique, arguing the project represents an unwarranted intrusion by the central bank into the private sector.
Speaking during a recent “Handelsblatt” podcast debate alongside Jürgen Schaaf, an ECB advisor on market infrastructure, Bofinger condemned the digital euro as lacking any justifiable basis in free market principles. He advocated instead for supporting existing private European payment solutions, referencing Wero, a pan-European payment system launched by banks in five EU member states as a potential alternative to dominant US-based platforms like PayPal.
Schaaf defended the ECB’s approach, asserting that the decline in cash usage reflects broader market trends, rather than a failure of the central bank. He framed the digital euro as a necessary evolution, bringing the benefits of central bank money into the digital realm and ensuring access for citizens. A key stated objective is strengthening Europe’s digital sovereignty and reducing reliance on American payment providers, including Visa, Mastercard and PayPal.
However, Bofinger’s criticisms highlight a growing tension between the ECB’s stated aims and concerns about regulatory overreach. The move to create a digital currency risks politicizing a fundamentally financial ecosystem and potentially stifling innovation within the private sector. Furthermore, critics question whether the claimed benefits in digital sovereignty outweigh the potential for unintended consequences, including increased surveillance and the erosion of privacy for European citizens. The debate underscores a fundamental disagreement on the appropriate role of central banks in a rapidly evolving technological landscape, with implications for the future of European finance.