The Digital Euro Between Innovation and Authority A Political Instrument Shaping Stakeholder Dynamics

This thesis examines the digital euro, the European Central Bank’s (ECB) project to introduce a central bank digital currency for the euro area. While often presented as a response to technological innovation and changing payment habits, the digital euro is above all a political project. Its ultimate aim is to consolidate the ECB’s authority, preserve monetary sovereignty, and prevent foreign or private actors from dominating Europe’s payment landscape. The analysis shows that the digital euro is meant to tackle two long-term challenges: declining cash use and Europe’s reliance on non-European or private digital payment tools. To address this, the project must make key design choices: balancing privacy with traceability, encouraging adoption without harming financial stability, and fostering innovation while containing systemic risks. The thesis further shows that the value of the digital euro lies less in efficiency gains than in reinforcing the ECB’s powers: the ability to issue money, regulate its circulation, supervise payment systems, and act as lender of last resort. At the same time, the introduction of the digital euro will be disruptive. Banks face deposit substitution and higher refinancing costs; payment service providers and merchants must adapt their infrastructures; consumers’ expectations do not always align with stability requirements; and anti-money laundering frameworks will need revision, particularly for offline transactions of the digital euro. The conclusion argues that these disruptions, though significant, are outweighed by the risks of inaction. The digital euro is not merely a technological innovation but a strategic act of integration, essential for a stronger ECB and a more autonomous EU.