A Strategic Shift: European Union Evaluates Ethereum as Infrastructure for the Digital Euro

The European Union is reportedly exploring a transformative shift in its approach to the Digital Euro, considering the utilization of public blockchain infrastructure, specifically Ethereum, to host its Central Bank Digital Currency (CBDC). This deliberation marks a significant departure from previous discussions that leaned towards strictly private or centralized ledgers controlled entirely by the European Central Bank (ECB).

The primary driver behind this potential pivot is the urgency to maintain Europe’s monetary sovereignty in an increasingly digital global landscape. With the United States recently passing the "Genius Act" and establishing a clearer regulatory framework for its massive stablecoin market, European officials are concerned that dollar-pegged tokens could dominate cross-border transactions, effectively sidelining the Euro. By leveraging a public blockchain like Ethereum, the Digital Euro could benefit from existing liquidity, interoperability, and a vast ecosystem of decentralized finance (DeFi) applications.

Supporters of the Ethereum-based approach argue that using a public ledger would allow the Digital Euro to circulate more freely and transparently across international borders. It would provide an open system that facilitates programmable money, enabling smart contracts to automate complex financial processes. This could significantly reduce costs for businesses and enhance the Euro’s competitiveness against private stablecoins such as USDT or USDC.

However, the proposal is not without its hurdles. Critics and privacy advocates raise concerns regarding the transparent nature of public blockchains. While transparency is a boon for auditing, it poses challenges for individual user privacy, a core value in European regulation. To address this, the ECB is looking into Layer 2 scaling solutions and privacy-preserving technologies (like Zero-Knowledge Proofs) that could allow the Digital Euro to run on Ethereum’s security layer while keeping personal transaction data confidential.

As of February 2026, the European Parliament has shown increasing support for the Digital Euro project, aiming for a legislative framework to be finalized by mid-2026. If the path forward includes public blockchain integration, it would represent one of the boldest moves by a major central bank to date, potentially bridging the gap between traditional state-backed finance and the burgeoning world of decentralized technology.

Posted Using INLEO