Economists issued a joint letter warning: If the

# Source: Wall Street Insights

By Long Yue

More than 60 prominent economists have written an open letter to the European Parliament, warning that the Eurozone risks losing monetary sovereignty and becoming long-term dependent on U.S. payment firms such as Visa and Mastercard if it fails to advance the **digital euro** project. The letter points out that 13 Eurozone countries currently lack local digital payment solutions, leaving them highly vulnerable to geopolitical risks.

Over 60 leading economists have appealed to the European Parliament to defend the digital euro initiative amid lobbying pressure from the banking sector, in a bid to safeguard Europe's monetary sovereignty.

On January 11, as reported by the *Financial Times*, more than 60 distinguished economists issued an urgent call to EU legislators, urging full support for the digital euro project. They cautioned that the failure of this initiative would expose the Eurozone to the risk of "losing control over its own currency" and further deepen its reliance on U.S. payment giants.

In an open letter addressed to Members of the European Parliament (MEPs), the 68 signatories—including renowned French scholar Thomas Piketty—stated plainly that a robust public digital euro is not a "luxury", but a "fundamental safeguard" for Europe's sovereignty, stability and resilience. The letter, sent last Friday, aims to influence the European Parliament hearing scheduled for next week.

The economists pointed out that 13 Eurozone countries currently have no local digital payment options and are fully reliant on "international card schemes" such as Visa, Mastercard and PayPal. They warned that such over-reliance would leave Europe exposed to "geopolitical leverage, foreign commercial interests and systemic risks beyond European control".

"Europe will lose control over the most fundamental element of our economy: money. A sound public digital euro is our only line of defense," the economists wrote in the letter.

Signatories include scholars such as France’s Eric Monnet, Germany’s Jan Pieter Krahnen and London-based Daniela Gabor. They argue that the current state of dependence makes Europe highly susceptible to external geopolitical pressure, and that the establishment of an independent public digital payment system is imperative.

While the European Council supports the European Central Bank (ECB)'s plan to launch a digital form of cash by 2029, it remains uncertain whether the proposal will secure majority backing in a crucial vote in the European Parliament later this year.

## Banking Sector Resistance and Interest Games

The European banking industry is actively lobbying to scale back the project. In November last year, 14 major banks—including Deutsche Bank, BNP Paribas and ING—warned that the digital euro could undermine private-sector efforts to compete with U.S. payment systems. A German banking lobby group even criticized the ECB's plan as "too complex", "too costly" and offering "little tangible benefit" to consumers.

Fernando Navarrete, a Spanish conservative MEP appointed by the European Parliament to assess the digital euro, has also advocated for drastically reducing the scope of the project, highlighting divisions at the legislative level.

Hans Stegeman, Chief Economist at Triodos Bank—one of the initiators of the open letter and a supporter of the ECB’s plan—said bluntly that other banks are primarily concerned about losing retail customer deposits. Under the current plan, individual digital wallets will have a holding limit of €3,000, and these funds will no longer count as cash deposits for commercial banks.

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