Digital Euro: One cost may hide another

Following PwC in June, the ECB presented its own assessment of the costs of a digital euro for banks in the Eurozone. Thanks to extensive cost synergies, their initial investment over the first four years, estimated at EUR 18 billion by PwC, would, according to the ECB, be within a more modest range (between EUR 4 and 5.77 billion). But this amount, which has attracted a lot of attention, is not the only issue at stake, as the recurring cost of replenishing banks’ reserves with the Eurosystem could, in the long term, weigh more heavily on financing conditions.

On 29 October, the Governing Council of the European Central Bank (ECB) began a new step in preparation for the digital euro and published an indicative timetable for its launch. Subject to the adoption of a legislative framework by the European Parliament and the Council in 2026, a pilot exercise could start in 2027 and the ECB could issue its digital currency as early as 2029[1] .

This project is raising concerns among banks in the Eurozone, not because of its perfectly laudable objective (preserving European sovereignty), but because of the proposed terms (see, for example, the open letter published last week by the EPI[2]).

About two weeks earlier, the ECB had presented its estimate of the investment costs associated with the digital euro[3] for the banking industry, based on the study published in June 2025 by PwC[4]. Conducted at the request of European credit sector associations[5], the PwC cost study suggests that an investment effort of EUR 18 billion for Eurozone banks is needed. These costs cover the necessary initial investments (system development, infrastructure adaptation and integration with existing services). However, recurring operating costs (maintenance, updates and technical support) are not included in the scope of the analysis.

Based mainly on additional synergies (accounting for 95% of the cost), the ECB has lowered the figure from EUR 18 billion to between EUR 4 billion and EUR 5.77 billion, an amount that the ECB considers modest, as it accounts for only 3% of the banks' annual IT costs[6]. However, the picture is quite different when the EUR 18 billion estimated by PwC is compared to the EUR 220 billion in aggregate net income of Eurozone banks in 2024[7]. However, this battle of figures obscures the essential point: the cost of the digital euro to the banking sector will not lie so much in the initial investments (which are already significant), but instead in the additional refinancing from the Eurosystem needed to compensate for the loss of reserves resulting from the conversion of customer deposits into digital euros. We estimate this cost to be close to EUR 8 billion per year, based on average assumptions.

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