The debate around the digital euro has long moved beyond experts and regulators, so today, it’s a matter of Europe’s strategic future. As a central bank digital currency (CBDC), the digital euro could become a cornerstone of the next decade’s financial infrastructure, reshaping how payments, trust, and monetary policy work.
The CP Media editorial team spoke with Tamara Schmidt, Executive Director of the Digital Euro Association, who shared her insights on the prospects of the digital euro and its role in transforming Europe’s financial system.
The Future of the Digital Euro as a Tool for Europe’s Financial Transformation
How would you assess Europe’s readiness to introduce the digital euro? Will it mark an evolution of the existing financial system or a genuine revolution?
Europe is making real progress, but the digital euro will be more of an evolution than a revolution. It builds on what already works, a strong banking system and trusted payment infrastructure, while addressing new needs such as digital resilience, inclusion, and efficiency. It’s about modernizing money, not replacing the system.
It’s worth noting that the European Central Bank views the introduction of the digital euro as a strategic step to maintain control over monetary policy, ensure the stability of the financial system, and preserve monetary sovereignty.
In your view, who will benefit most from the introduction of the digital euro — governments, banks, FinTech firms, or end users?
Ideally, everyone. If designed well, the digital euro can serve the public interest while opening opportunities for banks and FinTechs to innovate. Citizens would gain a secure and accessible payment option backed by the central bank, while the private sector could build new services on top of it. The goal is to create a balanced and collaborative ecosystem.
What kind of balance do you anticipate between central and commercial banks once the digital euro is in place? Could CBDCs pose a threat to the traditional banking model?
The two-tier model should remain intact. Central banks would issue the digital euro, but distribution and interaction with users should stay with private intermediaries. The digital euro isn’t meant to replace banks; it’s meant to strengthen trust and improve efficiency. With the right limits and incentives, it can coexist smoothly with the existing system.
Earlier, European bankers voiced concerns that the introduction of the digital euro could lead users to abandon traditional banking intermediation in currency operations, potentially triggering a global banking crisis within the EU.
What tangible advantages could the digital euro offer consumers and businesses, beyond payment convenience?
There are several. It could bring more security, offline usability, and wider access to digital payments. For businesses, it means faster settlement, lower costs, and easier cross-border payments. For citizens, it offers an additional choice: a truly European, public digital payment option that works everywhere in the euro area.
Public vs Private Money: CBDCs and Stablecoins in Focus
Many observers today view stablecoins as a private alternative to central bank digital currencies. In your opinion, can the two coexist peacefully, or will one model ultimately prevail?
They can absolutely coexist. Stablecoins bring innovation and flexibility, while a digital euro would provide trust and stability. The key is interoperability and clear rules. A healthy financial ecosystem should include not only both but many different forms of digital money, private and public, working side by side. The real challenge is designing interoperability and ensuring regulatory clarity so the different forms of money can flourish.
More details on the role of stablecoins and their interaction with central bank digital currencies can be found in The Role of Stablecoins in Financial Sovereignty.
Could the rapid development of CBDCs stifle innovation emerging from the private sector, particularly within the DeFi ecosystem?
That’s a fair concern, but it doesn’t have to be that way. If the digital euro is open and programmable, it could actually enable innovation. The public sector should provide a stable foundation, and the private sector should build on top of it. Collaboration, not competition, is the way forward.
What is your perspective on hybrid models that would allow public and private digital currencies to interact through a shared infrastructure?
We see hybrid models as very promising. They combine the best of both worlds: public trust and private innovation. A shared infrastructure can create interoperability, transparency, and efficiency. Europe should really think in terms of coexistence and shared frameworks rather than separation.
More details on the principles of using open-source software (OSS) and open licenses in the development of central bank digital currencies can be found in Open Source CBDC.
Programmable Money and New Forms of Monetary Policy
How might the very nature of money evolve if it becomes “programmable”? Could future money serve not only as a medium of exchange but also as a means of influencing behavior?
Programmability can make money smarter; it can automate payments or enable new services, but it should never be used to control people’s behavior. We need to draw a clear line between innovation and intrusion. The DEA supports a human-centered approach where technology empowers users, not limits them. The CBDC Manifesto underscores the importance of agency, transparency, and privacy in this money evolution.
Which applications of a programmable euro do you find most promising — in social policy, taxation, or automated contracting?
There are many useful cases: automatic tax payments, real-time settlements for companies, or targeted social aid. Smart contracts can also make processes more efficient. The focus should be on making things easier and fairer, not adding restrictions or conditions to how people use their money.
What ethical and legal challenges, in your view, accompany the rise of “smart money”? Where should society draw the line between efficiency and intrusion into privacy?
Privacy is the number one challenge. We need strong safeguards to make sure digital money doesn’t become a tool for surveillance. Transparency, legal clarity, and governance are essential. At the DEA, we strongly advocate for a privacy-first and human-centric design, because trust will ultimately decide whether people use the digital euro.
The European CBDC project has been under development since 2020. In 2022, a series of compatibility tests were conducted to assess how the digital euro integrates with the existing financial infrastructure. In 2023, active testing of the digital currency began, along with the development of standards and regulatory frameworks for the digital euro.
Between 2024 and 2025, the draft regulation was prepared, and several technology providers were selected to support the future CBDC infrastructure. In 2026, the adoption of legislation governing the use of the digital euro is expected, followed by pilot trials of the currency in 2027. According to the European Central Bank (ECB), the digital euro could become available for use by Eurozone citizens as early as 2029.
