Digital Euro: What Is It and What Are Its Advantages and Disadvantages?

• June 24, 2025
• Alejandro Postigo
• no comments

In recent years, European central banks have intensified efforts to develop a digital version of the euro: the so-called digital euro. This new form of electronic money aims to align with the digital transformation of the financial system, promoting faster, safer, and more accessible payments.

But what does this transformation really mean? How will it affect citizens, businesses, and financial institutions? In this article, we analyse the pros and cons of the digital euro and what it could represent for the European economy.

What Is the Digital Euro?

It will be a digital currency issued by the European Central Bank (ECB), equivalent to the current physical euro, but in a 100% electronic format. Unlike decentralised cryptocurrencies such as Bitcoin, the digital euro will be backed and controlled by the ECB, with legal tender status across all eurozone countries.

The goal is for any citizen to have a digital account, enabling direct, instant payments without intermediaries, using an official digital wallet.

Advantages of the Digital Euro

Greater security and stability.
As it will be issued by a central bank, the digital euro will be protected against cryptocurrency volatility and backed by the strength of the physical euro.

Facilitates digital payments.
It will allow for fast payments, no fees, and 24/7 availability, even offline in some formats.

Improved financial inclusion.
It could help unbanked individuals access the financial system, reduce reliance on cash, and promote digital inclusion.

Lower transaction costs.
By removing intermediaries in certain operations, it may reduce fees for both consumers and businesses, especially for cross-border payments within the EU.

Combat money laundering and tax fraud
Thanks to a traceable digital record, authorities can better monitor suspicious transactions.

Disadvantages and Risks

Loss of privacy.
Despite security mechanisms, using a state-issued digital currency means the ECB could potentially access citizens’ payment data, raising privacy concerns.

Impact on commercial banks.
If citizens move funds to digital euro accounts, it may reduce deposits in traditional banks, affecting their lending capacity.

Technological dependence.
It requires secure digital infrastructure, electronic devices, and internet connectivity, potentially excluding the elderly or people in rural areas.

Risk of misuse
During financial uncertainty, citizens might massively transfer funds from commercial banks to digital euros, creating systemic stress.

How Will It Affect Businesses and Consumers?

For companies and self-employed professionals, the digital euro may streamline automated payments, integrate with billing software, and allow instant payments without bank charges.

For consumers, it will offer a faster and safer payment method, although it will require adapting to new technologies and digital money platforms.

When Will It Be Available?

The ECB is currently in the development and pilot testing phase. The digital euro is expected to begin limited rollout from 2026, with a gradual transition period.

Conclusion

This represents a natural step towards the digitisation of the European economy. Like any innovation, it brings great opportunities but also significant challenges. Its implementation must balance efficiency, privacy protection, and banking system stability.

At MJ Consulting, we continuously analyse fiscal, technological, and financial changes that may impact our clients. If you want to prepare for the arrival of the digital euro, or adapt your business to new payment models, contact us for personalised advice.

Get in touch with us today to find out how we can help.

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