The Left Group in the EU Parliament has today published a major study making the case for the “Public Option for a Digital Euro”. The digital euro would be a digital form of central bank money, i.e., the euro. It could be used just like cash – but in virtual form. The digital euro would be the central bank digital currency (CBDC) of the euro area.

The Study authored by the Paris-based think tank the Veblen Institute for Economic Reforms shows how the ECB’s conservative approach to the design of the Digital Euro misses the radical opportunity to recast the monetary system the Digital Euro creates. The report’s editors, Tristan Dissaux and Wojtek Kalinowski, commented: “If we want Europeans to adopt the Digital Euro, we should design it in a way that serves the whole of society and addresses the current problems of the payment system, such as inequalities of access or high costs for end-users. This calls for a public option, linking the ECB directly to citizens and non-financial actors. The current investigation phase will be crucial in deciding what the future Digital Euro will look like, so we urgently need a broad democratic debate, including a wider range of actors than just banks and financial institutions.”

The study highlights crucial design and policy choices that decision-makers will have to face at some point in the process and discusses what they mean for the future digital euro. But we might also take a step back and ask what will happen if the ECB chooses not to develop the digital euro after all? As stated by the ECB itself, “the counterfactual to a digital euro is not the status quo but a financial system in which private payment assets may dominate in future” (ECB, 2022h). This is not a desirable future for the monetary system nor for our economy.

CBDC is a truly disruptive innovation that could radically improve our monetary system: as such, it will naturally encounter resistance from banking and financial industries who currently dominate the payment system. This resistance concerns first and foremost the “public option” we recommend in this study, and which could in our opinion restore the lost balance between public and private money within the monetary system.