MONETARY SOVEREIGNTY AFTER THE FINTECH EVOLUTION: THE IMPLICATIONS OF THE DIGITAL EURO PROJECT

by Valerio Lemma

Abstract: This article analyses the evolution of the digital euro project in light of the transformations brought about by fintech in money markets. Beginning with the emergence of cryptocurrencies as private alternatives to sovereign money, the study highlights the risks that such competition may pose to financial stability, state monetary sovereignty, and the integrity of the individual’s legal sphere. Particular attention is paid to the possibility that these risks may be amplified where private payment infrastructures become tools for the collection and exploitation of users’ behavioural data. From this perspective, the digital euro is examined as a potential public instrument for restoring balance, provided it is grounded in democratic oversight, technological autonomy, and data minimisation. Finally, the paper explores the legal implications of the custody and fungibility of the digital euro within credit institutions, emphasising the need to avoid forms of banking disintermediation in order to ensure the project’s consistency with the European Treaties.

 

Summary: 1. Introduction. – 2. Technological innovation and money. – 3. Cryptocurrencies and the need for money. – 4. New categories of monetary risks. – 5. The Digital Euro Project. – 6. Is the Digital-Euro Project looking for a new form for the EMU currency? – 7. The Digital Euro Project and the credit function. – 8. The risk due to the involvement of technology providers. – 9. Conclusions.

1.      Introduction.

The functional and operational model of a cryptocurrency requires a solid legal base to set forth the safe and sound management of end-to-end flows and the quality of the user experience, even if it is issued by the European Central Bank. Actually, this is clearly stated by the current results of the ‘digital euro scheme Rulebook Development Group’, established by the Digital Euro HLTF at its meeting of 19 January 2023, and it offers a particularly significant starting point for introducing a preliminary legal-economic analysis of the current state of the digital euro project.

It seems possible to hypothesise that the ECB assumes, more clearly than previous institutional communications, that the Eurosystem no longer conceives the digital euro merely as a monetary policy experiment or a technological innovation in payment services, but rather as a genuine monetary infrastructure intended to regulate the circulation, custody and transfer of value within the Economic and Monetary Union. And this hypothesis calls for a series of verifications.

Indeed, the digital Euro as a liability of the ECB requires the creation of a complete set of (private and public) rules governing access management, liquidity management and transaction management. Such terminology is particularly revealing because it reproduces the conceptual architecture traditionally associated with private payment schemes and banking infrastructures, even if it seems to refer to money itself.

From a legal perspective, this set of rules is not neutral. On the contrary, it suggests that the Eurosystem already assumes the structural involvement of credit institutions and payment intermediaries in the circulation of the digital euro, thereby requiring to clarify as to whether the latter cannot operate outside the traditional architecture of banking intermediation (as it could represent a new form of savings collection). From this perspective, these rules are decisive, because they shift the debate away from the merely technological dimension of central bank digital currencies and towards the legal nature of digital euro deposits themselves.

This development raises a fundamental legal question, such as whether digital euro holdings should be regarded as a form of sovereign money whose deposit with intermediaries necessarily implies the transfer of ownership and the creation of a credit claim against the depositary institution for preserving a form of credit function based on the multiplier of deposits. If so, the collection of digital euro holdings would necessarily be regulated as a form of deposit-taking activity reserved to authorised credit institutions under the logic traditionally underpinning the banking function within the Economic and Monetary Union.

The importance of the answer to this question extends beyond technical classification. The legal qualification of digital euro holdings/deposits directly affects the stability of the banking system, the preservation of credit multiplication mechanisms and the consistency of the digital euro project with the constitutional structure of the EMU. A model based on direct and segregated holdings vis-à-vis the ECB could produce significant disintermediation effects, potentially altering the equilibrium between central bank money and commercial bank money that currently sustains European credit markets. Conversely, a model grounded in the fungibility of deposits and the transfer of ownership to intermediaries would preserve the traditional architecture of banking intermediation, while still allowing the ECB to modernise sovereign currency through digital technologies.

It is precisely within this unresolved tension between sovereign currency and banking intermediation that the present analysis is situated. The purpose of this article is therefore to examine whether the digital euro may be coherently integrated into the European monetary legal order only if it is treated, from a legal perspective, as ‘money’ in the traditional sense; namely, as a fungible asset whose deposit necessarily entails the transfer of ownership and whose collection may consequently be reserved to prudential supervised credit institutions.

2.      Technological innovation and money.

The implications of the monetary phenomenon appear to be broadening their scope as a result of new products,[1] in that – for some time now – the circulation of wealth has been taking paths which, in some way, present themselves as alternatives to sovereign currency and, in particular, propose to use intangible assets to interact with socio-economic functions that the legal system usually attributes to currency itself. These are alternatives which – for the purposes of this paper – we shall refer to as ‘cryptocurrencies’, to identify those intangible assets that arise as the result of the application of a new technology capable of generating an element (devoid of intrinsic utility, credit or any other right, but) suitable for circulation (where accepted by the parties to an exchange). [2]

There is no doubt, therefore, that any examination of cryptocurrencies must begin with the concept of money, an ambivalent expression of both a social convention and a legal classification.[3] This gives rise to an intrinsic problem regarding the scope of the concept itself, attributable – on a socio-economic level – to the widespread adage that ‘money is what money does’ (generally attributed to the US economist Milton Friedman[4] ) and – on a legal-economic level – to the absence of a general and uniform definition of money within the EU legal order. It is no coincidence that legal scholarship has adopted differing positions regarding the aforementioned cryptocurrencies, depending on whether or not they can be linked to one or more of the functional and sector-specific definitions found in the legal system (with examples ranging from the references set out in Article 128 of the TFEU, to the concept of ‘currency having legal tender status in the State’ referred to in Article 1277 of the Civil Code, to the ‘virtual currency’ of Legislative Decree 190/2017[5] and to the provisions on ‘funds’, ‘payment instruments’ and ‘electronic money’ in the PSD, Directive 2015/2366). [6]

At the same time, it seems reasonable to hypothesise (and assume) that the success of certain cryptocurrencies may reflect a demand for money expressed by the markets;[7] a demand so great that it has led certain operators (particularly those in dire need) to resort even to alternatives that fulfil only some of the typical functions of money, even accepting high levels of risk or significant functional limitations.[8] It goes without saying that, if we accept the above hypothesis, it is also possible to ask whether such alternatives can be conceived as substitutes for sovereign currency – albeit imperfect ones – and, as a result, circulate freely within the EU’s capital markets. Hence the interest in the possibility that policymakers might move towards forms of public intervention that either incentivise (as seems to be happening in the United States of America) or limit the scope of these virtual alternatives. Consequently, from a legal perspective, there is an opportunity to examine the characteristics of cryptocurrencies in greater depth, following an approach that addresses in particular detail the evolution of the project to adopt a new form of common currency promoted by the European Central Bank under the title of ‘Digital Euro’,[9] , in order to assess the compliance of such an innovation with the provisions of the European Treaties and the objectives of Economic and Monetary Union.[10]

Conversely, it does not seem useful, for the purposes of examining the aforementioned aspects in greater depth, to dwell on the lexical variations used in the context of privately issued cryptocurrencies; nevertheless, it is worth noting that the wide variety of cases found in this market can be viewed as a unified whole, given the absence of any reference to traditional (publicly issued) monetary authorities. However, it should not be overlooked that cryptocurrencies and other assets based on new technologies, on the one hand, are traded for sovereign currencies and, on the other, fuel daily flows of wealth circulation. The European regulator is aware of this and has approached the phenomenon in stages, first introducing anti-money laundering controls (through Directive (EU) 2015/849) and then a comprehensive framework for the market in which crypto-assets circulate (through Regulation (EU) 2023/1114).

Therefore, with regard to the protective objectives inherent in the European project, it is of primary importance to assess whether the use of a new technology for the issuance of sovereign currency (the so-called ‘digital euro’) could, on the one hand, serve as an alternative to the main privately issued crypto-assets and, on the other, constitute a liability of the European Central Bank (and, therefore, qualify as a component of the monetary base and the public-sector payment system). Indeed, the outcome of this assessment may help to prevent inappropriate interference by the technology operators involved in the issuance and circulation of privately issued cryptocurrencies.

3.      Cryptocurrencies and the need for money.

Central to the functioning of the markets is the policy of tolerance that Member States have adopted to date regarding the circulation of cryptocurrencies,[11] , as well as the attention being paid to the prospect of a digital euro project.^[12]

Whilst there is a desire for integration between the various types of digital solutions, it must be borne in mind that private cryptocurrencies are based on the hope that they will be able to fulfil their function (and, in particular, to facilitate payments) even at a future date (relative to the time of their acquisition by the user). Conversely, the digital euro appears destined to base its value on a commitment by the European Central Bank, hence the reference to a new form of exercising monetary power anchored to cryptography and telematics.

This is not a matter of assessing – in a more or less positive light – the payment solutions offered by innovation, nor of acknowledging that they may increase competition between the public and private sectors at the intersection of trade and currency (whether sovereign or an alternative to the latter). What needs to be addressed is the current trend towards interoperability in payment systems, or even towards a single infrastructure capable of supporting every payment solution (public or private).[13] It is no coincidence that the ECB has admitted that it wishes to avoid the fragmentation of processes, the fragmentation of consumers and the division of merchants along geographical lines (with national communities adopting technical solutions that cover only part of the Eurozone) or other developments that might prevent payment solutions from taking advantage of the scale of the single market.[14]

It goes without saying that, in the context of European integration, the aim of ensuring interoperability (of the technological infrastructure used for payments) is not driven by a desire to ensure the economic equivalence of cryptocurrencies and the euro, but rather seeks to promote economies of scale and scope capable of supporting a smoother circulation of the euro, by utilising the product innovation brought about by the latest applications of cryptography (namely through a new technological platform for sovereign currency that utilises the technology currently underpinning cryptocurrencies). Consequently, the implementation of this intention should lay the foundations for the adoption of a regulatory framework capable of governing new forms of complementarity between the public and private sectors, subject to the need for a form of supervision that ensures the technical quality of every intangible asset circulating in the monetary market, as well as the reliability of every technology underpinning each type of payment instrument.

What must obviously be avoided is any confusion amongst users, as any technological parity (between the public and private sectors) must not give rise to the belief that there is some sort of economic equivalence (specifically, between sovereign currency and its alternatives). This is an objective of full legal and economic significance, as a cognitive asymmetry on this point would lead the currency market towards a failure that could undermine social welfare.

4. New categories of monetary risks.

An analysis of the transformations brought about by technological innovation in monetary markets requires us to focus on a category of risk which, whilst not entirely new in its economic context[15] , now takes on a qualitatively different form due to the pervasiveness of the infrastructure used by cryptocurrencies and their ability to affect the personal legal sphere of individuals.[16] In particular, the use of (forms of currency based on) privately-developed technologies exposes operators and markets to risks that are not limited to the dimensions of financial stability or the protection of savings, but extend to encompass deeper aspects of the human sphere, relating to informational self-determination, freedom of contract and, ultimately, the very configuration of power relations within the wired society.[17]

Indeed, the technological infrastructures underpinning many private-blockchain cryptocurrencies – and perhaps even those that will form the basis of the digital euro – could be structured according to models that record human experience and then use it as raw material capable of generating behavioural data, which is subsequently processed and exploited for predictive purposes.[18] In this context, the information flows generated by the use of money – and, in particular, investment transactions and payment services – are not limited to representing a means of utilising wealth or settling transactions, but become constituent elements of a broader process of value extraction, in which the economic behaviour of the individual user is observed, recorded and progressively transformed into a body of information capable of being exploited for commercial purposes.

The circulation of currency via an electronic infrastructure, therefore, lies at the crossroads between its function as a means of payment and the generation of data, thereby also helping to create a surplus (of information and, consequently, economic value) that exceeds the functional requirements of the payment service it accesses and lends itself to being used for the construction of predictive models relating to the future choices of cryptocurrency users. This consideration raises fears of a significant shift in the traditional market paradigm, in which money was seen as a neutral tool for facilitating trade, towards a scenario in which cryptocurrencies (and perhaps even the digital euro) could act as devices capable of actively influencing the analysis of individual preferences.

To put it provocatively: we no longer need to ask whether cryptocurrencies are money; rather, we should be asking whether they might be data-collection tools capable of using such data to understand economic behaviour. If this were the case, we might witness a market in which cryptocurrencies facilitate the availability of increasingly granular data and its integration into pervasive computational architectures[19] This creates the conditions for certain parties (namely those with access to the structure and operation of cryptocurrencies) to obtain information that can be used to guide, modulate and, in some cases, determine the behaviour of counterparties through techniques of nudging, tuning and the systemic steering of choices. [20]

From this perspective, the monetary function, when based on private infrastructure, risks being progressively absorbed into a broader system of behavioural control, in which the economic dimension is intertwined with the informational and relational dimensions, with obvious implications for fundamental freedoms.

At this stage of the investigation, it seems reasonable to argue that policymakers must address this phenomenon, as its defining characteristic ultimately lies in the emergence of radical information asymmetries between those who manage cryptocurrency infrastructures and the users of those infrastructures. Indeed, it seems possible to argue that the former are in a position to accumulate extremely detailed knowledge of the habits, preferences and economic interactions of the latter, whilst the latter remain largely unaware of how the algorithms work and how the collected data is used.[21] This results in a configuration of legal relationships in which the user can no longer be strictly classified merely as a customer of a service, but also as a source of value extraction, whose experience is systematically captured and reworked for purposes beyond those typical of currency.

We are therefore faced with a scenario in which cryptocurrencies could directly affect the integrity of the personal legal sphere, as their use would trigger a series of algorithmic processes (and reactive behaviours) which, ultimately, would result in a restriction of the individual’s ability to control information concerning them and, consequently, to make their own independent choices (not only economic).

In light of the above, it seems reasonable to conclude that the adoption of a digital euro based on private infrastructure cannot be considered solely in terms of efficiency, technological innovation or monetary policy.[22] Indeed, its implications for the distribution of power within society must be assessed. In particular, data collection and analytical capabilities appear set to become concentrated in the hands of a few private operators, often active on a global scale and sometimes based in non-European jurisdictions; and this creates the risk of a gradual erosion of the EU’s monetary sovereignty, understood not only as the power to issue currency, but also as the capacity to govern the conditions of wealth circulation in a manner consistent with the principles of the legal system.

5. The Digital Euro Project.

The EU has long been considering the adoption of a European infrastructure to support the digital circulation of wealth and, more recently, the Eurosystem’s project aims to adapt central bank money to the innovative ways for the circulation of money, addressing the current challenges facing the European payments ecosystem.[23]

Moreover, it is now widely accepted that the institutions of the Economic and Monetary Union must ensure the stability of the monetary system, which – in the past – reflected the growth prospects of the national economy, its competitiveness, and a state’s net lending or borrowing position vis-à-vis other countries[24] . However, the debate remains open as to whether the ECB can today fully perform the tasks of a central bank, given that the configuration of European monetary instruments and infrastructure only partially possesses the public-law characteristics necessary to fully implement the monetary policies of the twentieth century.

That said, it seems reasonable to argue that the adoption of a digital infrastructure for the issuance of the digital euro cannot be attributed simplyto the ECB’s technical discretion, but may raise questions regarding the social implications of such a public intervention. This refers not only to the social issues addressed in the previous paragraph, but also to the more detailed question of verifying consistency with the EU regulatory framework, given that the European Treaties have established an Economic and Monetary Union (EMU) designed to support the convergence of domestic economies (based on the interaction between the ESCB and the ECB).^[25]

It is surprising, in a negative sense, that the Treaties contain particularly detailed rules on monetary matters,[26] going so far as to stipulate that the ECB has an ‘exclusive right’ to authorise the issue of ‘banknotes’ in euros,^[27] and, for this purpose, specifying the technical form of the medium to which the sovereign currency issued by the ECB and by the states that have adopted the euro is to be anchored (namely banknotes and coins).

In this regard, it should not be overlooked that, at the time the Treaties were drafted, the first bitcoin had not yet been created (which is generally believed to have occurred between 2008 and 2009).^[28] However, this consideration does not allow us to overlook the question of whether the text of the TFEU needs to be amended to include the cryptographic support envisaged for the digital euro amongst the technical forms already mentioned in the Treaty itself.[29]

Nevertheless, any attempt to adopt a dynamic interpretation of the European Treaties would also be surprising – once again in a negative sense – as it would create uncertainty regarding the initiation of work on monetary matters based on a particularly broad interpretation of the rules governing the performance of the tasks assigned to the ESCB (Article 132 TFEU) and the ordinary legislative procedure laid down for the use of the euro as the single currency (Article 133 TFEU).[30]

Moreover, in this regard, it seems reasonable to assume that the money market would not tolerate such uncertainty.[31]

We are therefore faced with a proposed scenario that raises questions of significant importance, stemming from the need to carefully assess the effects of the digital euro, given that the effects of introducing such an innovation are not neutral, but depend on the type of technology the European Central Bank might choose and on how the European legal framework is adapted to the introduction of a sovereign currency in cryptographic form. Hence, attention must be paid to the possible developments of the project, which at times seems to be moving towards limited scope (due to quantitative thresholds) and, at other times, towards functionalities comparable to payment instruments (rather than sovereign currency).

6. Is the Digital-Euro Project looking for a new form for the EMU currency?

In light of these potential developments, it seems worthwhile to consider the significance of the operating rules for the digital euro (which, of course, must comply with the regulatory framework of the Economic and Monetary Union), assuming that we are dealing with a form of currency representation and circulation which – although different from physical forms – remains anchored to the traditional paradigms of ownership and possession. In particular, it should be considered that the recording of the digital euro in the accounts of institutions holding deposits of it should be regarded as uncontroversially accepted, although it appears necessary to clarify whether Member States must provide for the obligation to treat this transaction as a form of direct deposit-taking, with the consequent transfer of ownership (against the creation of a credit claim). The same applies to the case of sending orders for the transfer of money deposited with credit institutions or other authorised intermediaries (as occurs when payment services are provided).[32] This is because it appears that a deposit of money is involved, the recording of which should follow the principle of fungibility and the transfer of ownership; consequently, in the case of a digital euro deposit with an intermediary, the counterpart could be a direct commitment by the depositary rather than that of the monetary authority (i.e. a liability of the central bank).

According to this hypothesis, the digital euro project would follow the traditional dynamics of savings collection, in that the corresponding deposit would be recorded as a liability of a credit institution or another intermediary (thus giving substance to book money).[33] It is this evidence that supports the assertion that, at present, ‘there are in fact two types of money’: in the case of cash payments, ‘central bank money’ is used, and in the case of electronic payments, ‘money issued by private entities’[34] .

At present, however, there is a possibility that the digital euro project might envisage these forms of circulation being anchored to a new type of data flow; a type which – whilst potentially improving the ease and security of transactions (along with confidentiality and a reduction in transaction costs) – would not involve the transfer of ownership of the digital euro to the intermediary. Whilst this would, on the one hand, be achieved through the decentralised and distributed design of the systems supporting the settlement of the transactions in question, on the other hand, it would raise doubts regarding the functioning of credit circuits and competition between commercial banks and the ECB.

With regard to the regulation of the digital euro, the policy decisions that will form the basis of the digital system for the encrypted circulation of value are therefore of central importance, as are the regulatory decisions that will give substance to the agreements between the parties involved in building the relevant infrastructure and in the administration of the digital euro itself (with regard to the transfer of rights associated with it and the relevant rules on holding and custody).[35]

The technological design and regulatory framework governing legal relationships concerning the digital euro are, therefore, the elements that link the statehood of sovereign currency to the practical outcomes of financial innovation. The effective linking of these elements will then lead to the usability of significant process innovations (relating to the circulation of wealth and the functioning of means of payment) and product innovations (regarding cryptocurrency, crypto-assets and the digital euro); innovations which, on closer inspection, appear destined to influence monetary dynamics.[36]

7. The Digital Euro Project and the credit function.

At this stage of the investigation, it seems necessary to examine the relationship between sovereign money and the credit function; a function that banks perform through the mechanism of deposit multiplication.[37] It is clear, in fact, that – even today – sovereign (non-digital) currency has fuelled credit circuits, into which it flows via a deposit contract that transfers ownership of the currency to the depositary institution and grants a credit claim to the depositor. Between the two (deposit and credit), therefore, there is an instrumental relationship that underpins the smooth functioning of the real economy.[38]

As mentioned, it is necessary to consider the framework that should govern the digital euro deposit, as the relevant regulations may have a direct impact on the relationship between sovereign currency and the credit function. Indeed, classifying the digital euro deposit as irregular and, at the same time, as the result of a public savings-raising activity could suggest that the legal regime is anchored to a traditional framework, which would entail the transfer of ownership to the credit institution – to which, on closer inspection, such an activity might well be reserved. Hence, the recognition of a credit claim on the part of the customer (for a countervalue denominated in euros) and, therefore, the assumption of the same counterparty, operational and systemic risk profiles that have hitherto accompanied the deposit of (non-digital) euros with a credit institution.

Conversely, one might assume that the custodian does not have the right to use the digital euros held in custody, with obvious negative consequences for the potential to fuel the phenomenon of deposit multiplication. Indeed, this approach appears to be based on the assumptions set out in the early digital euro proposals, which envisaged a digital model creating a direct counterparty relationship between the owner of the digital euro and the ECB. On closer inspection, this formula (which retains ownership of the digital euro with the depositor) presents lower counterparty risk profiles (as the depositor would be a direct creditor of the ECB rather than of a commercial bank),[39] with obvious reasons to assume a preference for the digital euro over bank deposits among users who are particularly risk-averse.[40] Linked to all this is the danger – highlighted by the Federal Reserve – that these characteristics of CBDCs could make bank runs more likely or more severe (including through the rapid conversion of bank deposits into CBDCs); this would have obvious effects both on the dynamics of banking crises and on the effectiveness of current early intervention or crisis management tools.[41]

It is no coincidence that it was speculated that the digital euro would be highly attractive to savers[42] and that there might be competition between the digital euro and the deposits offered by commercial banks.

However, this hypothesis has not yet been definitively confirmed, as there is no legal definition of the custody of the digital euro, despite the availability of detailed information regarding the IT profiles that would make each digital euro easily identifiable and segregable within a set (as, indeed, would be possible if the serial numbers of banknotes deposited by a customer were recorded). Moreover, it is not clear why the digital euro project should assume the absence of a deposit/custody framework for the digital euro that (i) reserved such activity for entities authorised to take deposits; (ii) concerned a quantity of money; (iii) granted the depositary the right to use it, subject to the acquisition of ownership, and therefore to return an equivalent amount of the same kind and quality.[43]

8.      The risk due to the involvement of technology providers.

On closer inspection, the involvement of external technology providers in the design or management of public monetary infrastructure could also give rise to similar issues, relating both to system security and to the possibility that interests outside the EU’s public sphere might influence elements essential to the functioning of the internal market and to citizens’ freedoms.

In this context, the role of the European Central Bank takes on central importance, since – in the exercise of its monetary function within the Economic and Monetary Union – the ECB is called upon not only to ensure price stability and the smooth functioning of payment systems, but also to safeguard the integrity of money as a fundamental legal institution and the protection of individual rights, as the ultimate aim of public action.[44] In the current context, this implies the need for the ECB to take direct responsibility for the new risks arising from the interaction between money and technology, directing its actions in such a way as to prevent the involvement of external suppliers or developers from resulting in an undue restriction of citizens’ freedoms. It therefore seems possible to argue that the creation of a form of sovereign cryptocurrency, directly linked to the ECB’s balance sheet, should be conceived as a suitable instrument to counter the abuses described above, offering a public alternative to private solutions and, thus, preserving a balance between the need for efficiency and the protection of the individual’s legal sphere.

It follows that the regulator’s task will be to structure the digital euro project in such a way as to avoid the mere introduction of a cryptographic replica of sovereign currency, creating an instrument that facilitates the circulation of wealth in order to improve its functioning.[45] In other words, it seems possible to conclude that the European project requires the regulation of an infrastructure essential to the functioning of the internal market in accordance with democratic principles; therefore, the design must remain firmly anchored to public authority, in order to prevent private entities from gaining, even indirectly, undue market power. The same applies to the management of the infrastructure, the provision of services and the circulation that it is intended to support. This implies, in particular, that the regulations governing the technological architecture of the digital euro must include criteria of strategic autonomy and public accountability, excluding any form of dependence on private entities, especially those located in third countries.

It therefore seems possible to argue that the digital euro cannot be realised through a mere assimilation of pre-existing organisational models, but – once implemented – it must be based on the specific characteristics of sovereign currency, among which the public guarantee, neutrality with respect to commercial interests and the protection of user privacy are of particular importance. In this context, it is essential to address the need to structure the digital euro in such a way as to ensure that data relating to its use is processed – including by public bodies – in accordance with the principles of data minimisation and purpose limitation, avoiding any form of exploitation for purposes other than those strictly necessary for the functioning of the system.

To conclude on this point, it is clear that the adoption of the digital euro could represent a crucial step in redefining the relationship between the public and private sectors, particularly within the economic context of our ‘wired society’. This, however, entails the challenge of balancing innovation with the protection of rights, through policy choices consistent with the precautionary approach characteristic of social democracies. Therefore, if one possible interpretation were to classify the digital euro’s infrastructure as an essential public good, then a first consequence might be the affirmation of the intention to remove the project from market logic and govern it according to principles of political accountability, democratic oversight and administrative management. Indeed, through such an approach, it seems possible to ensure that the evolution of the currency does not risk resulting in a loss of sovereignty and a curtailment of citizens’ legal rights, but rather contributes to strengthening the conditions for the functioning of an open and democratic society.

9.      Conclusions

It goes without saying that the issues raised at this stage of the Euro-digital project’s development once again appear to go beyond the intrinsic validity of the technical solution to be implemented. Therefore, what appears necessary is the involvement of the political authorities to clarify the legal aspects that can definitively establish the feasibility of the innovation in question and, at the same time, ensure that the digital euro can circulate effectively within the banking system, so as to prevent this project from resulting in a risky process of credit disintermediation.[46]

In this perspective, the digital euro project ultimately raises a series of legal questions whose significance extends far beyond the implementation of a new payment instrument and directly concerns the future configuration of monetary sovereignty within the Economic and Monetary Union.

Should a digital form of central bank money be introduced within the current framework of the European Treaties, without the adoption of a more explicit legal basis capable of recognizing a cryptographic representation of sovereign currency alongside banknotes and coins, one of the fundamental questions underlying the entire digital euro project would have received a positive answer.[47] Hence, the path towards the implementation of the digital euro would appear considerably more straightforward from both a legal and an institutional perspective.

Should the holding of digital euro units with intermediaries be legally qualified as a deposit of money (thereby implying fungibility, transfer of ownership and a reservation of such activity to prudentially supervised credit institutions), then it may directly support the preservation of the traditional banking function, the continuity of deposit multiplication mechanisms and, ultimately, the stability of European credit markets in the digital age.

Should the Eurosystem ensure that the technological infrastructure of the digital euro remains compatible with the preservation of monetary sovereignty, banking stability and the protection of the individual legal sphere (against new forms of data extraction, algorithmic influence and private technological dependence), then the future of the digital euro may ultimately depend on the ability of European institutions to ensure that the digital transformation of sovereign currency does not result in a progressive transfer of economic and informational power from democratic institutions to global technological infrastructures operating beyond effective public control.

Much therefore remains to be clarified, regulated and institutionally consolidated before the digital euro may truly emerge as a stable and coherent expression of European monetary sovereignty; yet, it is precisely within these legal and economic tensions that the European project may still find the opportunity to reaffirm its capacity to reconcile technological innovation, democratic legitimacy and the protection of fundamental freedoms.

Author

Valerio Lemma is Full Professor of Law and Economics at the Law Department of Università degli Studi Guglielmo Marconi in Rome

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[1] See Merusi, Sulla sovranità monetaria, Modena, 2025; Holden, Money in the Twenty-First Century: Cheap, Mobile, and Digital, California, 2024; Various Authors, Monetary Policy Normalisation, edited by Savona and Masera, London, 2023-

[2] It is worth noting that the term is used to identify a phenomenon which, in the absence of a regulatory framework defining its content in relation to a legal definition, is usually described by analogy with sovereign currency, notwithstanding its electronic nature. Significant in this regard are the words used by the Central Bank of Ireland: ‘Cryptocurrencies – also known as digital currencies or virtual currencies – are a form of digital money. They allow payments to be made electronically and function in a similar way to standard currencies that use physical cash. However, unlike standard currencies that can be exchanged physically using notes and coins, cryptocurrencies are only exchanged electronically using lines of computer code. Examples of well-known cryptocurrencies are bitcoin and ethereum, but a wide range of others also exist’; see https://www.centralbank.ie/consumer-hub/explainers/what-are-cryptocurrencies-like-bitcoin

[3] See, for all, Capriglione, entry ‘Moneta’ in Enc. dir., updated edition, 1999, p. 761 ff.; Id., ‘Le cripto attività tra innovazione tecnologica ed esigenze regolamentari’, in Rivista Trimestrale di Diritto dell’Economia, 3/2022, p. 225 ff.

[4] See Spindt, ‘Money is what money does: monetary aggregation and the equation of exchange’, in Journal of Political Economy, 1985, pp. 1975–2204.

See also Friedman, ‘Quantity Theory of Money’, in *The New Palgrave: A Dictionary of Economics*, edited by John Eatwell, Murray Milgate, and Peter Newman, vol. 4, pp. 3–20. New York: Stockton Press; and London: Macmillan, 1987, where it is argued that ‘Despite continual controversy over the definition of money, and the lack of unanimity about relevant theoretical criteria, in practice, monetary economists have generally displayed wide agreement about the most useful counterpart, or set of counterparts, to the concept of money at particular times and places. … The quantity theory of money takes for granted, first, that the real quantity rather than the nominal quantity of money is what ultimately matters to holders of money and, second, that in any given circumstances people wish to hold a fairly definite real quantity of money.’

[5] See Article 1, paragraph 2, subparagraph qq, of Legislative Decree 231 of 2007.

[6] We are therefore faced with a semantic confusion that does not facilitate the reaching of a shared solution to regulate the monetary phenomenon and the related spheres in which it operates; hence the need for a political decision to unify the functional approaches outlined in the text, in order to ensure that technological innovation does not steer the circulation of wealth towards paths that are incompatible with the objectives of maximising social welfare, which form the foundation of European integration.

[7] See BIS global liquidity indicators extracted from the document ‘BIS international banking statistics and global liquidity indicators at 2025-Q4’, June 2025

[8] See Altavilla, Boucinha, Burlon, Adalid, Fortes and Maruhn, ‘Stablecoins and monetary policy transmission’, ECB Working Paper Series, No 3199.

[9] It seems appropriate to link the term ‘digital euro’ to a reflection on the use of this adjective to denote one of the paths of financial innovation, challenging a semantic confusion that could prevent legal experts from identifying the most suitable frameworks for regulating the phenomenon. Often – all too often – the term ‘digitalisation’ is used in the study of economics and finance as a mere descriptive formula for technological progress, thereby obscuring its actual conceptual scope. Strictly speaking, it denotes the transition from the analogue order – based on the continuous and analogical representation of reality – to the digital order, based on the numerical decomposition of information, discrete computation and the translation of phenomena into sequences of digits capable of algorithmic processing. However, this interpretative framework cannot be mechanically transposed to the financial sector, since the economic sciences have, in fact, been based for centuries on numerical quantities, quantitative measurements and accounting recording techniques structured according to the double-entry method. It follows that, in this context, the issue is not so much one of managing a supposed transition from analogue to digital, but rather of understanding and regulating the new technological infrastructure for information which, in essence, has always consisted of numerical data.

[10] See ECB, Update on the work of the digital euro scheme’s Rulebook Development Group, 9 April 2025.

[11] In the European legal order, the proposed regulation on the matter has defined the concept of ‘crypto-asset’ as ‘a digital representation of value or rights that can be transferred and stored electronically, using distributed ledger technology or similar technology’ (Article 3(1)(2) of the MiCAR Regulation Proposal).

In this regard, it is worth bearing in mind that public intervention must address the technical characteristics of the products and, consequently, the rights and obligations they entail. This also means that the regulation of risks associated with crypto-assets relates both to the use of cryptography (and decentralised networks for circulation) and to the rights a consumer acquires by investing in crypto-assets; see Ammannati, ‘Regolare o non regolare, ovvero l’economia digitale tra ‘Scilla e Cariddi, in AA.VV., I servizi pubblici. Vecchi problemi e nuove regole, Turin, 2018, p. 101 ff.

It is worth noting in advance that this is a set of rules designed to define the operating procedures for assets that do not qualify as financial instruments (as defined in Article 4(1)(15) of Directive 2014/65/EU), nor as electronic money (as defined in Article 2(2) of Directive 2009/110/EC, except where they qualify as electronic money tokens within the meaning of this Regulation); deposits (as defined in Article 2(1)(3) of Directive 2014/49/EU); structured deposits (as defined in Article 4(1)(43) of Directive 2014/65/EU); securitisation (as defined in Article 2(1) of Regulation (EU) 2017/2402); see Articles 1 and 2 of the MiCAR Proposal.

It has been clear, since the MiCAR proposal, that the European authorities aim to put in place specific safeguards against certain types of risk, in order to help prevent fraudulent schemes; in particular, the aim is to safeguard the integrity of portfolios whilst establishing the liability of service providers (in the event that the latter fail to meet their custody obligations). Therefore, it should be noted that this proposal considers crypto-assets and the related infrastructure jointly, with the obvious consequence of leaving it to supervisory practices to verify a balanced allocation of rights and obligations to the parties who – in various capacities – are involved in the transactions in question; see Hondius, The Protection of the Weak Party in a Harmonised European Contract Law: A Synthesis, in Journal of Consumer Policy, Springer, vol. 27(3), 2004, p. 245 ff.

[12] It goes without saying that, in the first case, the system requires the use of a device to access a web-based service (e.g. computers, smartphones) or for the immediate use of digital euros (e.g. smart cards), whereas the online or offline usability of the latter is left to the discretion of the designers.

It is worth noting that, in general, operations involving cryptocurrencies (or rather the acquisition of specific rights over such assets) may also be accompanied by powers, obligations or rights, the exercise of which affects the legal and financial sphere of the relevant transferees (or the original issuer), so that in addition to the digital data, one must also take into account the agreements governing the relevant transfer (and which sometimes give substance to the encrypted record); see Mersch, Money and private currencies: Reflections on Libra. Speech by Member of the Executive Board of the ECB, at the ECB Legal Conference, Frankfurt am Main, 2 September 2019.

[13] At present, the digital euro could be provided in the form of an account-based or token-based instrument; see ECB, Report on a digital euro, op. cit., p. 29.

[14] See Cipollone, ‘Innovation, integration and independence: taking the Single Euro Payments Area to the next level’, Speech by a Member of the Executive Board of the ECB, at the ECB conference on ‘An innovative and integrated European retail payments market’, Frankfurt, 24 April 2024.

[15] See Huynh, Nguyen, Duong, Contagion Risk Measured by Return Among Cryptocurrencies, in Econometrics for Financial Applications. ECONVN 2018, Studies in Computational Intelligence, No 760, Springer, 2019, where, through the use of Kendall plots, Chi plots and Copula models, the existence of contagion phenomena between the returns of different cryptocurrencies is identified, with particular intensity during downturns; a circumstance which confirms that certain risks already known in financial markets take on, in the digital context, new forms of propagation and greater systemic speed.

[16] See Lupton, Digital Risk Society, in Burgess, Alemanno, Zinn (eds.), The Routledge Handbook of Risk Studies, Routledge, London, 2016, pp. 301–309, for further considerations regarding the dynamics of innovation, where – in addition to a relationship with already known risks – new dangers are also encountered which, by affecting personal spaces, social institutions and bodies through surveillance and data collection practices, require continuous monitoring; a perspective that allows us to grasp the particular intensity of the risks associated with pervasive digital monetary infrastructures.

[17] See O’Malley, ‘Policing the Risk Society’ in the 21st Century, in Sydney Law School Research Paper, No. 16/11, 2016, where it is observed that risk management in contemporary societies tends to shift from traditional structures towards electronic and computerised technologies of surveillance and control; a point which highlights how, in digital monetary markets, the adoption of private infrastructures can affect not only economic aspects, but also the balance of information and power relations between operators and users.

[18] See Ramos, Silva, ‘Privacy and Data Protection Concerns Regarding the Use of Blockchains in Smart Cities’, in Proceedings of the 12th International Conference on Theory and Practice of Electronic Governance, 2019, for an analysis concluding with a proposal for a prior assessment of the necessity and proportionality of the processing of data entered into private infrastructures, as well as full compliance with European principles of personal data protection; a finding that confirms how digital infrastructures intended for economic functions can transform users’ information flows into resources capable of further exploitation.

[19] See Giannopoulou, Ferrari, ‘Distributed Data Protection and Liability on Blockchains’, in Internet Science. 5th International Conference, INSCI 2018. Proceedings, Vol. 2. Workshops, 2019, for a detailed examination of European data protection rules, assuming that these must be deemed applicable whenever personal data is processed within the blockchain ecosystem, with potential liability resting with a number of parties involved in the control or processing of such data; this hypothesis is linked, in legal terms, to the observation that certain cryptocurrencies may operate not only as instruments of exchange, but also as infrastructures capable of collecting, organising and making usable information that may influence future economic conduct.

[20] On this point, Chang’s position, ‘Blockchain: Disrupting Data Protection?’, in Privacy Law and Business International Report, November 2017, is relevant, as the author highlights the possibility that blockchain technologies may possess characteristics capable of posing significant challenges to the security and protection of personal data; hence the further hypothesis that those who design or govern such infrastructures may acquire privileged information, capable of indirectly influencing user behaviour and market decision-making dynamics.

[21] See Finck, Blockchain Regulation, in German Law Journal, vol. 19, no. 4, 2018, pp. 665–692, for an initial examination of the emergence of blockchain technology and the regulatory techniques suitable for governing its early stages of development, highlighting the need to address organisational and informational structures that differ from traditional models, and suggesting that, in the cryptocurrency economy, information asymmetries between the operators of technological infrastructures and the users accessing them may be exacerbated.

[22] See Grunewald, Zellweger-Gutknecht, Geva, ‘Digital Euro and ECB Powers’, in Common Market Law Review, vol. 58, no. 4, 2021, pp. 1029–1056, and the approach used to address the issue of the Eurosystem’s competence to issue a digital euro, as the findings clarify how the monetary powers of the European Central Bank can be considered to be necessarily exclusive in nature. This confirms the observations made in the text regarding infrastructure choices relating to the digital currency, which are also set to impact the practical preservation of European monetary sovereignty vis-à-vis private centres of economic and informational power.

[23] See ECB, Preparation phase of a digital euro – Closing report, 2025

^[24] From a legal perspective, the sovereign currency – and its credibility – was linked to the function of discharging monetary obligations, subject to the general obligation to accept whatever was legal tender in the State at the time of payment and at its face value; see, for all, the approach underlying the Concluding Remarks by the Governor of the Bank of Italy, at the Ordinary General Meeting of Shareholders held in Rome on 31 May 1994.

^[25] In this regard, it should be noted immediately that the Member States have also agreed that the ordinary or simplified revision procedure for the Treaties provides for consultation with the European Central Bank in the event of institutional changes in the monetary sector (Art. 48, paras. 3 and 6, TEU).

[26] In resolving questions regarding the feasibility of the digital euro within the EMU, the central role of the ‘European System of Central Banks’ (ESCB) in relation to the objective of price stability and the support of general economic policies within the Union, in accordance with the principle of an open market economy with free competition, promoting an efficient allocation of resources and respecting common principles (Article 127(1) TFEU).

In this regard, the tasks expressly assigned to the ESCB relating to the definition and implementation of EMU monetary policy, as well as to the promotion of the smooth operation of payment systems (Article 127(2) TFEU), are significant. Nevertheless, the ‘specific tasks’ that the Council may entrust to the European Central Bank concerning policies relating to the prudential supervision of credit institutions and other financial institutions, excluding insurance undertakings, appear to be relevant (Article 127(6) TFEU).

^[27] This is subject to the stipulation that ‘banknotes issued by the European Central Bank and by the national central banks shall be the only banknotes to have legal tender status in the Union’ (Article 128(1) TFEU).

For the sake of completeness, it should be noted that the Treaty on the Functioning of the EU has also addressed in detail the issue of euro ‘coins’, granting Member States the power to mint them subject to the approval of the European Central Bank regarding the volume of minting. Also significant is the provision that the Council, on a proposal from the Commission and after consulting the European Parliament and the European Central Bank, may adopt measures to harmonise the denominations and technical specifications of all coins intended for circulation, to the extent necessary to facilitate their circulation within the Union (Article 128(2) TFEU).

^[28] Permit me to refer to Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 31 October 2008, available at http://www.bitcoin.org.

[29] At this stage of the investigation, it might seem appropriate to leave any assessment of the scope of Article 128 TFEU to the Member States, which have set out their intentions in detail in the text of the Treaty, subject, however, to the ordinary or simplified revision procedure of the Treaties (which expressly provides for consultation of the European Central Bank in the event of institutional changes in the monetary sector, pursuant to Article 48(3) and (6) of the TEU). Moreover, it does not appear possible to envisage forms of solicitation or instruction directed at the ESCB or the ECB, which are, moreover, prohibited by Article 130 of the TFEU

In this regard, it is also necessary to take into account the obligation undertaken by each Member State to ensure that its national legislation is compatible with the Treaties and with the Statute of the ESCB and of the ECB. Therefore, should the digital euro be adopted, it will be necessary to assess the compatibility of the rules governing obligations with the circulation of such a currency and, consequently, the rules concerning discharge of debt, commingling of assets, fungibility and, ultimately, the provisions adopted by domestic law to ensure the reliability of the circulation of wealth and the quality of the currency. Hence, a connection with the provisions of Article 117 of the Constitution, as amended by Constitutional Law No. 3 of 18 October 2001, regarding our institutional framework on monetary matters.

On this point, it is worth referring to the document of the SENATE OF THE REPUBLIC, Research Service, Office for Research on Regional and Local Autonomy Issues, November 2001, pp. 22–23, where – in considering the matter referred to in letter e) of the aforementioned article – it is specified that this relates, in its various components, sometimes with a certain degree of redundancy (currency and monetary system), to the market and the financial economy as a whole. This document notes that in February–March 1998, state authority (letter c) was envisaged for currency, the protection of savings and financial markets; protection of the budget and the state’s own tax and accounting system, whilst the immediately preceding text (November 1997) referred to currency, protection of savings and financial markets (letter f), regulation of competition (letter e) and the state’s own budget and tax and accounting systems (letter i). See also Buzzacchi, ‘Risparmio, credito e moneta tra art. 47 Cost. e funzioni della Banca centrale europea: beni costituzionali che intersecano ordinamento della Repubblica e ordinamento dell’Unione’, in Costituzionalismo.it, 2016, issue 2.

[30] However, such an approach would nonetheless lead to an asymmetry between the legal provisions of the Treaties (which would remain limited to banknotes and coins) and the operational practice of the ECB (which would extend to digital, cryptographic and electronic representations). Hence the danger of exposing the circulation of currency to legal risks (or rather to a judicial interpretation differing from the one under consideration); a danger that appears incompatible with the security requirements characterising the internal capital market.

In this regard, the case law of the Court of Justice of the European Union on implied powers could be relevant, although, in doing so, one would first have to acknowledge that the text of the Treaty does not contain an explicit provision regarding the types of media that may be used for the circulation of the euro and, following a logical line of reasoning, conclude that the Union could adopt the necessary measures (i.e. the digital euro) to achieve the objectives set out in the Treaties (regarding monetary policy), provided, of course, that this is also closely linked to existing competences (see, inter alia, the judgment of 22 October 1987, Case 281/85, Germany v Commission).

[31] In other words, there is concern regarding the extent of the damage that may arise from a conflict between the aforementioned intention and a conservative interpretation of the text of the Treaties; consequently, the significance of the interests at stake here suggests that monetary policies should be maintained in full compliance with the legal framework and, therefore, to anchor the relationship between the existence (theoretical validity) and the operation (practical effectiveness) of the euro to solid and explicit legal principles.

[32] At present, it is clear that operators have accepted the transition from the physical delivery of banknotes and coins to the circulation of bank money (as a form of circulation without cash settlement, but activated by accounting entries recorded by banks) and electronic money (as a monetary value stored electronically, represented by a claim against its issuer, usable to carry out payment transactions through specific circuits following the use of certain services); see Savona, The economics of cryptocurrency, keynote lecture at the University of Cagliari, 30 September 2021. In this regard, it is worth bearing in mind that, in the market, the need for money has been met through the use of alternative assets (to the aforementioned forms of money) and, therefore, through the acceptance of financial instruments and, in specific cases, derivatives.

When considering the monetary functions of derivatives, it should be noted that the contracts governing the instrument in question are designed to transfer certain risks in whole or in part and, in doing so, also offer new opportunities for portfolio diversification (or for speculating on the reference values of the contracts themselves). In practical terms, the contracts in question can themselves be regarded as economic assets and, therefore, may be the subject of a consideration intended to settle a payment obligation assumed under another contract; see Savona, ‘Finanza dei derivati’, in Enciclopedia Treccani del Novecento, Supplement III, 2004.

Indeed, such use (of financial instruments and derivatives) has enabled market participants to hold ‘store of value’ assets that can be readily liquidated at a lower cost than that associated with monetary reserves (reserves which, of course, do not yield a return). These operators, however, regarded the aforementioned instruments as ‘good substitutes for money’ and, as a result of the generalisation of this view, assumed that they would have a mitigating effect on the monetary policy decisions of the relevant sovereign authority); see Savona, Preface, in Oldani, I derivati finanziari, Milan, 2010, p. 8; see also Masera, Elementi per una rilettura dell’articolo di Paolo Sylos Labini: ‘Inflazione, disoccupazione e banca centrale: temi per una riconsiderazione critica, in Moneta e Credito, March 2016, p. 121 ff., where the author highlights – with reference to the use of derivatives – that ‘in this way too, the traditional links between the monetary base, money and prices have changed profoundly. Monetary impulses via interest rates and the creation of liquidity do not trigger the traditional multipliers, but are reflected primarily in asset prices.

[33] Indeed, in economic policy studies, operational paradoxes have been observed, in that the holders of such instruments consider themselves liquid (because financial instruments and derivative contracts entitle them to money), even though the system – as a whole – is not (because each counterparty does not hold the necessary monetary quantity to complete the transactions envisaged by the instruments in question and, therefore, there is a risk of individual or systemic crises). Therefore, in the absence of specific safeguards (such as reserve requirements and/or capital ratios), there are inherent risks in the use of these instruments as an alternative to sovereign money, which must be taken into account in the regulation of this phenomenon, in order to avoid information asymmetries, market failures and systemic crises; See Savona – Maccario, ‘On the Relation between Money and Derivatives and its Application to the International Monetary Market’, in Open Economies Review, 1998, p. 637 ff.

[34] See ECB, The Digital Euro and the Importance of Central Bank Money, 5 October 2022.

[35] In this context, attention should also be paid to the role that European supervisory authorities – in particular the EBA and the ECB – could play in the authorisation and supervision of digital wallet providers, especially where these are entities already subject to prudential supervision or operating as payment service providers. Such supervision would help ensure that the custody and transfer of the digital euro take place within a regulated framework, consistent with the standards of security, stability and user protection already required in the context of traditional financial services; See ECB, Progress report on the investigation phase of a digital euro, 2022, pp. 25–27, which highlights the need to integrate the authorisation of wallet providers into a framework consistent with the supervision of payment service providers, not least to ensure the protection of end-users and the stability of the system.

[36] See Capriglione, La supervisione finanziaria dopo due crisi. Quali prospettive? – introductory speech, paper presented at the conference ‘Financial supervision after two crises. What are the prospects?’, Capri, University of Naples ‘Parthenope’, 17 and 18 June 2022.

[37] From a regulatory perspective, it should be noted that bank money is subject to regulation through a set of measures designed to achieve the dual objective of controlling its monetary effects; see Council Regulation (EC) No 2531/98 and Regulation (EU) 2021/378 of the European Central Bank on the application of minimum reserve requirements that a bank is required to hold in its reserve accounts with the relevant national central bank. Indeed, at European level, it has been considered that the system of imposing minimum reserve requirements could be used for the management of the money market and for the pursuit of monetary control objectives. To this end, the ECB’s powers must ensure that it has the necessary capacity and flexibility to impose minimum reserve requirements consistent with the different economic and financial contexts and conditions in the various participating Member States.

The same applies to the capacity to ensure the sound and prudent management of savings channelled into the credit system; see Brescia Morra, ‘Le forme della vigilanza’, in Various Authors, Manuale di diritto bancario e finanziario, Padua, 2019, p. 177 ff. regarding the transition from structural to prudential supervision.

Significant in this regard is the consideration underlying the European system, according to which the ECB must be able to act flexibly in order to take account of new payment technologies (such as the development of electronic money); see Council Regulation (EC) No 2531/98, Recital 5. It should also be noted that the matter is governed by European legislation and supervised by the Bank of Italy in order to ensure the sound and prudent management of the issuer and the smooth functioning of the payment system: this refers to Directive (EU) 2015/2366 of 25 November 2015 on payment services in the internal market.

[38] This is without prejudice to the fact that the use of bank money and electronic money entails the assumption of counterparty risk, mitigated by various safeguards; see Sabbatelli, Tutela del risparmio e garanzia dei depositi, Padua, 2012 and Troiano, I soggetti operanti nel settore finanziario, in AA.VV., Manuale di diritto bancario e finanziario, Padua, 2019.

[39] It should therefore be noted that the initial proposals for the digital euro contained elements of competition between the ECB and deposit-taking banks, as holding the digital euro fulfils a function as a ‘store of value’ that is an alternative to that provided by bank deposits.

It goes without saying that this function is analogous to that already performed by existing means of payment; however, it should be borne in mind that the digital medium allows for ease of accumulation, storage and use that the physical medium does not allow per se and by law (as a result of recent measures aimed at limiting the use of cash). Therefore, bank deposits may be of little appeal to risk-averse savers and to those who make extensive use of electronic payments (and are not interested in a return on the money used for this purpose), whereas – conversely – it may be attractive to customers inclined to receive – from banks – a return (obviously to an extent sufficient to compensate for the risks associated with such a credit position, which – as assumed so far – should, by their very nature, be greater than those associated with an ECB liability).

[40] The ECB’s Digital Euro project explicitly states the intention to improve monetary circulation and the awareness that this innovation will have an impact on the functioning of monetary dynamics, credit circuits, payment systems and other activities relating to the production, circulation and accumulation of wealth; see ECB, Report on a Digital Euro, op. cit., Section 3.

[41] Indeed, the Fed believes that traditional measures, such as prudential supervision, government deposit insurance and access to central bank liquidity, may be insufficient to prevent large-scale outflows of deposits from commercial banks to CBDCs in the event of a financial panic; see Board of Governors of The Federal Reserve System, Money and Payments: The U.S. Dollar in the Age of Digital Transformation, January 2022, p. 21 ff.

[42] This preference is therefore confirmed by the different nature (public) of the ECB and (private) of a credit institution of the entity required to fulfil the obligation to pay the equivalent value of the relevant liability.

It is worth recalling the approach proposed by Ciocca, La banca che manca. Central Banks, Europe, the Instability of Capitalism, Rome, 2014, on the broader issue of the central bank, its autonomy, its tasks, and the ways in which to fulfil them, which is at the centre of the political agenda, not only in Europe, following the debate sparked by the recent elections on the Old Continent regarding the future of the Union

[43] However, it should be noted that the design of the digital euro has formulated a regulatory framework aimed at limiting the amount of digital euro held by citizens within certain quantitative limits; see ECB, Report on a Digital Euro, op. cit., p. 28.

[44] See Sandner, Gross, The Digital Euro From a Geopolitical Perspective: Will Europe Lag Behind?, in FSBC Working Paper, February 2022, for an analysis of the significant strategic implications of the digital euro project, considered to depend on design choices, the infrastructure adopted and a comparison with initiatives relating to the digital dollar and the digital yuan. We are faced with an investigation that appears aimed at arguing that the European Central Bank’s role is not limited to monetary stability, but also extends to safeguarding European autonomy and citizens’ rights within the new technological payments ecosystem.

[45] See 2023/0212 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the establishment of the digital euro,

[46] See Lemma, Digital Innovation and Money, op. cit., p. 375 ff.

[47] However, it remains uncertain whether the existing provisions of the TFEU may legitimately support such an evolution through dynamic interpretation alone, or whether the introduction of the digital euro would instead require a broader political and constitutional intervention capable of redefining the legal foundations of European monetary integration itself.