The Future of Money in Europe: Central Bank Digital Currencies?

Abstract

The article examines the historical development, technological foundations, and institutional implications of central bank digital currencies (CBDCs), with a particular focus on developments within the European Union. Bitcoin and other cryptocurrencies have challenged aspects of traditional monetary systems and accelerated interest in state-backed digital alternatives. In the European context, this transformation can be understood as a multi-level process involving technological innovation, institutional adaptation, geopolitical ambition, and social cohesion. CBDCs are not merely a technological innovation but represent a powerful tool capable of fundamentally trans-forming the structure of the monetary and financial system. From a technological perspective, there is a clear diversity of approaches both among countries and within the European Central Bank (ECB). While most European initiatives are exploring the use of distributed ledger technologies (DLT), alternative solutions based on conventional database structures are also being developed. These varied approaches reflect not only technological preferences but also differing levels of trust in centralized versus decentralized systems, and they raise key questions regarding scalability, cybersecurity, and energy efficiency. CBDCs also present new possibilities for monetary poli-cy. In theory, digital currencies could allow for more effective responses to cyclical fluctuations through instruments such as negative interest rates. From a geopolitical standpoint, CBDCs are gaining significance, with the digital euro project forming part of broader efforts by the European Union to achieve strategic autonomy.