Economists Warn EU: Build a Real Digital Euro or Surrender to the Dollar

That is the stark warning from a coalition of 70 leading economists and academics. In an open letter published on Sunday by the Sustainable Finance Lab, the group argued that political compromises are fatally weakening the project. They warned that a diluted central bank digital currency (CBDC) would leave the bloc defenseless against US payment dominance and the rapid expansion of dollar-backed stablecoins.

The letter was addressed to the European Parliament and comes at a critical juncture. The authors argue that Europe’s payment system is already a colony of Silicon Valley and Wall Street. In 13 euro-area countries basic retail payments depend entirely on international card schemes (Visa and Mastercard) with no domestic alternative.

The sovereignty trap

The economists contend that this dependence is an existential threat. It exposes European citizens and governments to geopolitical pressure and foreign commercial interests.

"The risk is no longer theoretical," the signatories wrote. As US-backed private digital currencies and stablecoins gain scale Europe could lose control over "the most fundamental element in our economy: our money."

Against this backdrop the authors describe a robust digital euro as Europe’s "only defense." They argue it must function as a direct link between citizens and the European Central Bank (ECB). This preserves the role of public money in a digital economy alongside commercial bank deposits.

Legislative battleground

The intervention follows a significant political step in December. EU member states agreed on a common position that cleared the way for final negotiations in 2026.

However the economists fear that the final design is being hollowed out to appease commercial banks. The banking lobby has fiercely opposed a "strong" digital euro fearing it could cannibalize deposits. The letter urges policymakers to resist these "short-sighted" concerns and ensure the currency can be used offline and with high privacy standards.

ECB President Christine Lagarde has previously echoed these fears. She has warned that digital currencies operating outside the EU regulatory framework could undermine monetary sovereignty. The digital euro is viewed by Brussels not just as a payment innovation but as a strategic backstop against the "dollarization" of the internet.