ECB Projects Digital Euro May Displace Half of Circulating Cash Within Eurozone

The European Central Bank has released projections indicating its proposed central bank digital currency could potentially supplant up to 50% of physical euro banknotes currently in circulation. This transformative shift would represent one of the most significant monetary policy implementations in the euro area since its inception. The digital euro initiative, currently in its investigation phase, aims to modernize payment systems while maintaining financial stability across member states. Banking analysts suggest this move could accelerate the decline of cash usage while providing governments with enhanced monetary policy tools. The ECB emphasizes that any rollout would preserve cash accessibility while offering a secure digital alternative for everyday transactions.

In Brief

• The ECB anticipates that the digital euro could replace up to 50% of cash and 30% of bank deposits.
• Three adoption scenarios are considered, with an impact ranging from 15 to 256 billion euros in withdrawn banknotes.
• The official launch of the digital euro is scheduled for October 2025.
• Unlike the United States, Europe actively supports the digital euro, deemed crucial for its strategic sovereignty.
• Cybersecurity risks related to the digital euro have been identified, hence the development of the Polaris project.

The Digital Euro, a European CBDC with Disruptive Effects

The digital euro, the central bank digital currency (CBDC) promoted by the European Central Bank (ECB), could profoundly change the use of money in the eurozone. Although its official launch is only about 6 months away, the ECB is already anticipating its effects on banknotes and bank deposits.

In its latest report, the institution estimates that 5 out of 10 euros in physical banknotes could be replaced by digital euros. Furthermore, 3 out of 10 of these new “digital euros” would come directly from citizens’ bank deposits.

Three Adoption Scenarios Considered

The ECB has considered three levels of adoption: low, medium, and high. In the most limited scenario, 15 billion euros worth of banknotes would be replaced. In the case of massive adoption, this figure would rise to 256 billion euros. However, even in this hypothesis, the circulation of the digital euro would remain marginal compared to the 1,567 billion euros in banknotes currently circulating in the eurozone.

Digital Euro: A Response to Strategic Challenges

Unlike the United States, where President Trump recently banned the development of a digital dollar while supporting cryptocurrencies, Europe is actively pushing the digital euro. ECB board member Piero Cipollone considers this project a matter of strategic sovereignty.

The ECB also warns against risks related to technological dependency on this new currency. The Polaris Project, led by the Bank for International Settlements, aims to strengthen the resilience of CBDC infrastructures against cyber threats.

Scheduled for October 2025, the digital euro represents much more than a simple monetary innovation: it is a structural change that could redefine how Europeans use and store their money. Between digital sovereignty, geopolitical competition, and banking transformation, Europe seems determined to move forward on the path of CBDCs.

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