Europe‘s Long Road to Digital Public Money & Some Lessons from the Dutch Debate
By Martijn Jeroen van der Linden
21 January 2026
The European Parliament will define its stance on the digital euro in the first half of 2026, followed by negotiations with the Council and the European Commission. After that, several years will still be needed to build the technological infrastructure and the regulatory framework. If all goes according to plan, Europeans could be using the digital euro by 2029.
Yet over the past few years, the digital euro has turned into a contested project. It is frequently dismissed as “a solution in search of a problem.” In this vein, the European Parliament’s rapporteur, Navarrete, argues that priority should be given to a limited, offline digital euro—useful in case of outages, but not much more.
That position might be politically convenient, but analytically and historically weak. It overlooks the post-2008 debate on monetary reform as well as the quasi-oligopolistic structure of banking in many eurozone countries. In other words, it downplays some of the structural weaknesses of the current system that make a public digital alternative worth considering in the first place.
Rebalancing public and private money in the Netherlands in the aftermath of 2008
In the decade following the financial crisis, the Netherlands, along with Switzerland and the UK, had Europe’s most intensive debates about the monetary system and potential reforms [full disclosure: the author was involved in this debate from the beginning]. A central question in the Netherlands was: how do we restore the balance between public and private?
In 2015, the foundation Ons Geld (Our Money) collected 110,000 signatures, thereby placing the structural reform of money and banking on the parliamentary agenda. The citizens’ initiative argued that private banks wield excessive power in money creation and payments and proposed three changes: (i) reorient money creation toward public objectives rather than private gain; (ii) have the state provide a secure digital form of public money, functionally an alternative to commercial bank money; and (iii) stepwise alter the money-like status of bank deposits by removing public safety nets. In March 2016, the Dutch parliament debated the proposal and commissioned the Netherlands Scientific Council for Government Policy to conduct a study of the current monetary system and alternative architectures.
In the same year, another foundation, Full Reserve, attempted to establish a private, non-profit deposit bank. The idea was simple: A deposit bank would fully back deposits with (public) central bank reserves. It would not grant loans or make investments. Without taking those risks, it would only hold its customers’ money and process payments. Although the parliament unanimously adopted a motion to amend legislation so that Dutch citizens could save digitally at the deposit bank, this initiative was blocked by De Nederlandsche Bank, likely because it was a threat to the banking status quo.
In 2019, after three years of research, the Netherlands Scientific Council for Government Policy published its report Geld en Schuld (Money and Debt, translated into English in 2021). The Council defined two problems: the uncontrolled growth of debt and money, and a public-private imbalance in the monetary system. Although these problems are serious, the Council deemed two elements of the structural reforms proposed by the citizens’ initiative Ons Geld, i.e. changing money creation (i) and privatizing bank deposits (iii), too risky to pursue. Instead, the Council only proposed a safe public alternative alongside existing private bank money: either via a private or public deposit bank, or via digital central bank money. Such a public option would have a disciplining effect on private banks. If citizens and firms can credibly opt out into a public alternative, private banks are pushed to fund themselves with more equity and longer-term debt. According to the Council, such a public alternative would also pressure banks to offer savers a higher interest rate.
From The Hague to Frankfurt and Brussels
In 2019, then-Minister of Finance Wopke Hoekstra rejected the introduction of a deposit bank. He argued that savings up to a certain amount are already protected under the deposit guarantee scheme and pointed instead to digital central bank money. With that move, the debate about a safe public alternative was effectively shifted away from The Hague and relocated to Frankfurt and Brussels—into the institutional arena of the ECB and EU co-legislators.
The ECB’s leading role in the development of the digital euro ensured that the process was mainly driven by technical expertise rather than political considerations. The ECB initially presented the digital euro as a digital cash option with the overarching goals of ensuring public access to central bank money in the digital age, stabilising the monetary system, fostering innovation, and strengthening Europe’s strategic autonomy. Digital cash was intended to serve the same functions as physical cash: as a medium of exchange, a means of payment, a unit of account and a store of value.
As the project advanced, the ECB increasingly described the digital euro as “an electronic means of payment”. In public messaging, ECB board members stressed that a digital euro must be a means of payment and not “a form of investment” or “a store of value”. The technical design pivoted to minimise impact on banks, mainly via individual holding limits (€3,000), a fully intermediated model, and “waterfall/reverse-waterfall” mechanics that automatically fund/defund wallets from linked private bank accounts. The draft regulation of the European Commission codifies this design and proposes to empower the ECB to set holding limits.
Over time, the objectives of digital public money have thus been narrowed from implementing a full competitor to private bank money to introducing a new means of payment. This narrowing has made it much easier to dismiss the digital euro project as unnecessary technocracy: a solution in search of a problem. But when viewed against the post-2008 debate, the underlying issues have not disappeared.
Quasi-oligopolies, weak competition, and low deposit rates
In 2024, the Netherlands Authority for Consumers and Markets (ACM) concluded that there is little price competition in the Dutch savings market and that the behaviour of the major banks shows characteristics of tacit coordination. This is not uniquely Dutch. Across much of the eurozone, the banking sector remains highly concentrated. In most countries, the five largest banks hold more than 70% of total banking assets, rising to over 90% in several smaller economies. Recently, the Dutch private bank Triodos likewise problematized the monolithic, oligopolistic characteristics of the banking sector, where concentration has increased since 2000, and fewer banks dominate lending and savings. The consequences are not merely distributive (unnecessarily low deposit rates), but allocative as well: capital is allocated less efficiently when a small set of large incumbents can shape pricing and market structure.
In addition, Europe’s banking market remains structurally fragmented. One reason is that banks operate internationally in good times, but when things go wrong, they are resolved nationally. This institutional asymmetry limits cross-border competition and helps reproduce a euro area banking sector that is both concentrated and insufficiently dynamic. The digital euro would offer a pan-European alternative.
Geopolitics is not a substitute
In recent years, European politicians and central bankers have increasingly justified the digital euro through geopolitics: reducing dependence on US actors and infrastructures. That argument has real weight, especially because payments have become intertwined with platform power, sanctions capacity and strategic autonomy.
But geopolitics should not become a rhetorical shortcut that replaces the harder conversation about Europe’s own domestic monetary and financial structure. “Competitiveness” is frequently invoked in Brussels, yet the banking sector’s oligopolistic reality is rarely placed at the center of that discussion. A limited digital euro risks becoming symbolic: geopolitically branded, but economically and practically timid. To avoid this, 70 academics — including Gabor, De Grauwe, Krahnen, Monnet, Piketty, Schoenmaker and the author — recently warned that a scaled-down digital euro would become a symbolic gesture rather than a solution and called on European policymakers to place the public interest and monetary sovereignty at the centre of the negotiations.
A worthy public alternative requires political choices
The key question now is whether the digital euro will be implemented as a worthy European public alternative or as a constrained add-on designed mainly to avoid threatening incumbents.
A worthy digital euro needs to be developed as a real alternative to physical cash and bank deposits. To safeguard financial stability, a gradual rollout makes sense. In the initial phase, holding limits can be kept low, and then gradually increased to stimulate competition and strengthen the credibility of the public option. At the same time, deposit insurance could be decreased stepwise. European people and businesses should be able to use and hold digital euros through a diverse range of intermediaries, which include non-profit and public entities. To improve the international role of the euro, access for non-euro people and businesses should be seriously considered.
Conclusion
After 2008, there has been an intensive debate on the public–private balance in money. In the Netherlands, there were concrete initiatives, a unanimous parliamentary vote, and a recommendation for a public alternative by the main government policy research council. Furthermore, quasi-oligopolies remain in banking in most eurozone countries. A digital public alternative was proposed to rebalance power. However, over time, the ambitions of the digital euro have been gradually narrowed. 2026 will determine whether European lawmakers allow the digital euro to grow into a credible public option or whether it becomes, in hindsight, a subject of countless conferences and debates, but little institutional change.
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