A new in-depth analysis prepared for the European Parliament urges the European Central Bank to expand its assessment of the financial-stability implications of a future digital euro, including detailed scenario planning for deposit shifts, bank liquidity and market reactions. The paper, published ahead of the Monetary Dialogue on 3 December 2025, highlights the need for clearer communication and more granular policy analysis as the ECB advances into the next phase of work on the digital currency.
The report notes that the ECB has already considered broad design principles, but it argues that policymakers should now test additional scenarios related to the digital euro’s introduction and its potential impact on the European financial system. According to the authors, the central bank should examine how different adoption levels might influence bank funding costs, credit supply and payment-market competition.
Digital euro and financial-stability questions
One of the strongest recommendations focuses on financial stability. The paper states that the ECB should expand its analysis of how a widely used CBDC could affect the balance sheets of euro-area banks and the broader transmission of monetary policy. As outlined in the section “Digital euro and financial stability,” the study calls for more transparent modelling of potential deposit outflows, changes in liquidity buffers and interactions with existing payment infrastructures.
Lawmakers have previously raised similar concerns. Banks warn that a digital euro could reduce deposit bases unless holding limits or tiered remuneration are implemented. The report reinforces those fears by urging the ECB to clearly communicate any trade-offs between monetary policy objectives and financial-stability considerations.
Communication gaps and policy guidance
The document also argues that the ECB should broaden its monetary-policy communication. It proposes including supplementary indicators, publishing scenario analyses and being more explicit about how secondary objectives such as financial stability and climate considerations are integrated into policy decisions.
For the digital euro, this would mean publishing regular assessments of technical progress, adoption assumptions, and key friction points that could influence market expectations. The authors say such transparency would help maintain public trust and prevent misinterpretation as work progresses.
Why this matters for the digital euro timeline
The analysis comes at a critical moment. The ECB completed its preparation phase in October 2025 and is now working with private-sector partners while waiting for legislators to finalise the legal framework. Pilot testing could begin as early as 2027, depending on political negotiations.
Clearer communication and deeper scenario modelling, the report argues, will be essential as Europe approaches a point where design decisions begin to affect banks, payment providers and consumers. Without such work, policymakers risk underestimating the operational and financial implications of launching a pan-European digital currency.
What comes next
The findings suggest that the digital euro will remain at the centre of discussions between the ECB and lawmakers throughout 2026. As geopolitical tensions and payment-market fragmentation continue to influence the policy agenda, the pressure on the ECB to justify its design decisions and clarify risks is set to grow.
The analysis concludes that developing structured, transparent scenarios is necessary not only for internal planning but also for safeguarding confidence in the euro’s future digital form.