Digital euro rapporteur faces criticism over banking industry ties

The European Parliament's lead negotiator on the digital euro has come under scrutiny for a meeting pattern that critics say reflects the banking industry's priorities rather than the public interest. Since assuming the rapporteurship in July 2024, Fernando Navarrete, a centre-right MEP from Spain's People's Party, has devoted 77 percent of his formal engagements on the file to private payment service providers and commercial banks. A single meeting involved a non-governmental organisation.

A rapporteur's access list

The imbalance appears in the Parliament's own transparency register. Navarrete's calendar shows repeated sit-downs with the European Banking Federation, the European Payment Institutions Federation, and individual lenders including Santander, BBVA and Deutsche Bank. Consumer groups, academics and civil society organisations that have campaigned for a digital form of public money since the 2008 financial crisis have been largely absent. The European Consumer Organisation (BEUC) and Positive Money Europe both requested meetings; neither was granted a slot before the summer recess.

Navarrete's office did not respond to a request for comment on the meeting distribution. In a recent opinion piece, he described his approach as a "rational common ground" for discussing the European Central Bank's proposal for a central bank digital currency (CBDC). Critics argue the framing masks a defence of the status quo.

Public money versus private money

The disagreement turns on a distinction that rarely features in public debate: most money in the eurozone is not issued by the central bank. Cash, created by the ECB and national central banks, is public money. Bank deposits are private money, claims on commercial banks that arise when those banks extend loans. If a bank fails, deposits are at risk up to the €100,000 deposit guarantee limit; cash remains safe regardless.

Today, more than 85 percent of the money in circulation is private bank money. The share has grown as banks close branches and remove ATMs they deem unprofitable. According to ECB statistics, the number of bank branches in the euro area fell by roughly a third between 2008 and 2023, while the ATM network shrank by about 15 percent over the same period. The contraction has not been evenly felt. Eight percent of eurozone residents lack a payment card, and around one-fifth lack either a card or a payment account, with concentrations among lower-income households, the elderly and migrants.

The bank run argument

Navarrete has echoed the banking lobby's warning that a digital euro would trigger destabilising bank runs. The claim rests on the idea that households would flee private deposits for the safety of central bank money at the first sign of trouble, draining lenders of funding and choking credit supply. The ECB has taken the concern seriously enough to design the digital euro primarily as a payment instrument, not a store of value: it would pay no interest, and per-user holding limits, initially €3,000, would cap individual exposure.

Research published by the Bank for International Settlements and several national central banks suggests the risk is overstated. Holding limits, tiered remuneration and the ability to adjust caps over time give policymakers tools to manage migration. Some studies even argue a CBDC could reduce run incentives by giving supervisors real-time visibility into deposit flows, allowing earlier intervention at weak institutions. The ECB's own analysis, published in its 2023 progress report, concluded that "with appropriate design features, the risk of structural disintermediation is contained."

Competition in European banking

Navarrete also contends that a digital euro would undermine competition. The evidence points the other way. When the ECB raised its deposit facility rate from minus 0.5 percent to 4 percent between July 2022 and September 2023, European banks earned more than €100 billion a year on the excess reserves they park at the central bank. Pass-through to household savers was minimal. In Belgium, public anger forced the government to issue a one-year state bond at a competitive rate in 2023, but the effect faded once the bond matured.

The Dutch Authority for Consumers and Markets (ACM) went further. In a 2024 market study, it concluded that the Dutch savings market "shows features of a silent cartel", tacit coordination that keeps deposit rates below competitive levels across the major banks. The ACM has since opened a formal investigation. A digital euro, by offering a risk-free public alternative for payments, would introduce a competitive benchmark that private providers cannot easily ignore.

Privacy and the corporate alternative

On privacy, Navarrete has warned of surveillance scenarios that resonate in libertarian circles. The irony, his critics note, is that his preferred alternative leaves payment data in the hands of corporations that monetise it. Visa, Mastercard, Apple Pay and Google Pay build detailed behavioural profiles from every transaction. The ECB has repeatedly stated it would not see users' identities or spending habits. Settlement would require only minimal, pseudonymised data, no more than the central bank already processes in the TARGET2 system.

The ECB has also proposed going beyond the current legislative text: cash-like anonymity for offline peer-to-peer payments up to a modest threshold, and stronger privacy protections for low-value online transactions. As rapporteur, Navarrete could negotiate to enshrine those safeguards in law. Instead, he has used privacy as a reason to slow or narrow the project.

A transitional generation

The most revealing line in Navarrete's article is personal. "I am personally not eager to be part of the transitional generation, and I presume that is the case for most EU citizens," he writes. The sentence frames technological and monetary change as a burden to be avoided. Yet the developments he cites, declining trust in banks, the rise of stablecoins, the experimentation with tokenised deposits, suggest the transition is already underway. The question is whether the public sector shapes it or cedes the field to private issuers.

Civil society groups and academic networks including the Digital Euro Association and the European Central Bank's own advisory groups have argued for years that a digital public money option is necessary precisely because the status quo fails on inclusion, resilience and competition. The European Commission's legislative proposal, published in June 2023, aims to give the digital euro legal tender status for retail payments across the euro area. The Parliament and Council must now agree on the final text.

What happens next

The Parliament's economic and monetary affairs committee (ECON) is scheduled to vote on its position in October 2025, with a plenary vote likely before the end of the year. The Council, where member states hold divergent views, Germany and France broadly supportive, the Netherlands and Finland more cautious, is working towards a general approach in parallel. Trilogue negotiations could begin in early 2026. The ECB's governing council has said it will decide whether to issue a digital euro only after the legislative framework is in place, with a potential launch no earlier than 2027. Navarrete's draft report, expected in the coming weeks, will set the Parliament's starting line. Whether it reflects the 77 percent or the 1 percent remains to be seen.