Cash isn’t going away just yet—but it’s losing ground fast. Across the euro area, more people are paying with cards, smartphones and apps, while physical money plays a shrinking role in daily life.
For the European Central Bank (ECB), this digital shift poses a serious question: how do we preserve the role of public money in a world that’s going cashless?
Their answer: the digital euro—a central bank digital currency designed to work like cash, but in digital form.
“The main reason for issuing a digital euro is to preserve the benefits of cash in the digital era,” said Piero Cipollone, member of the ECB Executive Board, in a speech in July.
“To do so, we need to complement physical cash with a digital form of cash.”
What makes cash different?
Cash is simple, private, and universally accepted. You don’t need a bank account, there are no hidden fees, and your payment history stays with you—not with your bank, a tech firm or a retailer.
By contrast, most digital payments today involve private companies. Cards are easy to use, but they’re part of a commercial system. Every time you pay, the transaction goes through private networks that track your data, charge merchants fees, and can exclude people who are unbanked or less tech-savvy.
Today, much of our everyday spending relies on systems run by non-European players—whether it's cards from US firms or payment apps owned by tech giants.
"What’s particularly concerning in Europe is that the gap left by declining cash use is being filled by non-European payment solutions," Cipollone said.
Unlike cards or apps linked to private banks, the digital euro would guarantee full privacy for offline payments, and a high degree of privacy for online transactions.
A digital euro would be public infrastructure—free to use, widely accepted, and neutral.
Why do citizens need a digital form of cash?
Cipollone indicates that without a digital euro, the ECB risks losing its core role in people’s everyday transactions.
Between 2019 and 2024, the share of cash in payments across the euro area dropped dramatically—from 68% to 40% in volume, and from 40% to just 24% in value.
“The inability to use physical cash in online transactions or for digital payments at the point of sale deprives us of a key payment option,” he said.
“It reduces resilience, competition, sovereignty, and ultimately, consumers’ freedom to choose how to pay.”
He warned that if the ECB fails to issue a digital euro then the dependence on private and often non-European payment providers will increase.
Yet, there is even a bigger risk, and it has to do with monetary sovereignty.
As digital payments grow and cash fades, more and more of Europe’s financial infrastructure is controlled by private companies and foreign platforms.
Sovereign money doesn’t depend on any private institution.
Without a public digital payment option, the ECB fears losing control over how money flows through the economy.
A digital euro would ensure that central bank money remains relevant, not just in theory but in everyday life—whether you're shopping online, paying a friend, or buying groceries.
Cash is still king in Europe
Europeans have long had the right to use central bank money across the bloc. But if that right can’t be exercised digitally, especially as physical cash use declines, that pillar begins to crack.
Economist Filippo Taddei, from Goldman Sachs, echoed this concerns in a note published last week.
Many small businesses and consumers still prefer cash, and in some countries, that preference is even growing.
According to Goldman Sachs, nearly 30% of small and medium-sized enterprises in the eurozone prefer cash as a form of payment—but that figure rises to over 50% in Austria and nearly 40% in Italy.
Taddei also points out that in today’s fragmented payments landscape, without a public digital currency, the euro’s liquidity could suffer.
“If the EU doesn’t create a standardised platform using the digital euro,” he said, “we risk private money and foreign systems dominating, which would make central bank money less relevant.”
A digital euro could help establish open standards for merchants and payment service providers, strengthening merchants' ability to negotiate fees and fostering greater competition and innovation across Europe.
Another potential strength? The digital euro would work even offline—offering a secure payment method in emergencies, like natural disasters or power outages.
How would a digital euro work?
According to the ECB’s digital euro project, users would access the currency through a digital wallet, likely provided by their bank or a public authority.
Payments would be instant, free, and available both online and offline, making it as easy to use as tapping a card—even without an internet connection.
Funds could be loaded from a bank account or with physical cash, and holding limits would apply to prevent large-scale shifts from bank deposits. Importantly, the digital euro would protect user privacy—the ECB wouldn’t be able to track purchases or personal data.
One digital euro would always equal one euro in cash, offering a public, risk-free alternative to commercial digital payments.
When will the digital euro be issued?
Don’t expect to download a digital wallet just yet. The ECB is still in the preparation phase, which runs until October 2025.
After that, the Governing Council will decide whether to move forward—but only once the legislative process is complete.
“We hope to have all political and legal decisions in place very early next year,” Cipollone said in May.
Even if approved, the rollout will take time. The ECB expects the development phase to last between two and three years, meaning a realistic launch window is between 2027 and 2029.
Deutsche Bundesbank President Joachim Nagel suggested 2028 or 2029 is more likely.
Could a digital euro replace the dollar?
There has been much debate about whether digital currencies—whether central bank-issued or private—could challenge the dominance of the US dollar.
But the ECB has been clear: the digital euro is not about geopolitics or challenging the existing global financial order.
“It’s a retail payment tool,” said Cipollone. “It’s meant for Europeans—not international reserve holders.”
That kind of shift would require deep changes—like creating a unified Eurobond market, a more integrated capital system, and the ECB acting as a true global lender of last resort. We’re not there yet.
According to the International Monetary Fund (IMF), the euro accounted for 20.06% of allocated global reserves in the first quarter of 2025—up from 19.6% a year earlier, but still far behind the US dollar’s dominant 53% share.
The dollar still dominates global trade, commodity pricing, and cross-border lending because of trust, size, and decades-old networks.
The US also has an unmatched safe asset market, with over $27 trillion (€23.1tn) in US Treasuries—something the eurozone lacks.
So while the digital euro could strengthen the single currency inside Europe, it’s not designed to be a global reserve asset.
Bottom line
The digital euro isn’t meant to shake up global finance—and it won’t. What it aims to do is far more grounded: to give Europeans continued access to public money in a digital world, protect privacy, support financial inclusion, and future-proof the single currency.
“The role of cash will be significantly reduced if we do not provide a digital equivalent,” ECB board member Piero Cipollone said.
“If we fail to act, we will fail to fulfil our responsibility as a central bank towards the people we serve,” he warned.
In a world where tech giants and foreign platforms are shaping how we pay, the ECB wants to make sure that Europe still has a choice.
