The proposed design of the digital euro: A critical analysis

Mikolai Gütschow and Bernd Lucke ()
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Mikolai Gütschow: Dresden University of Technology (TUD)
Bernd Lucke: University of Hamburg (UHH)

Digital Finance, 2026, vol. 8, issue 1, No 7, 26 pages

Abstract: Abstract We analyse the Commission’s draft regulation for the establishment of the digital euro (DE). While well-intentioned, the design proposed by the Commission exhibits serious flaws. In particular, both the offline and the online versions of the DE show clear disadvantages compared with cash and online commercial bank money, respectively—for example, severe limitations on the store-of-value function of digital euros and strict holding limits unknown in current forms of money. There is essentially no discernible benefit to customers. Privacy remains comparable to current private payment systems, yet concerns persist about potential user re-identification at the central level. Competition, innovation, and trust are greatly undermined by the use of proprietary rather than open-source software. The enforcement of mandatory acceptance places competing means of payment at a disadvantage, even when technologically superior. The DE also distorts competition between banks and non-banks, as DE issuance and basic services are costly and unprofitable for banks. Banks may therefore resort to issuing a DE-based stablecoin that would be superior to the DE for both customers and banks, thereby undermining the ECB’s control over monetary policy. We show how these flaws can be addressed and outline an improved design for a European CBDC based on open software and elements of blockchain technology.

Keywords: Digital Euro; Payments technologies; Regulation; Privacy; Tamper-resistant design; E42; E58; E52 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1007/s42521-025-00171-2

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