Euro Money Tokens: CBDCs and Euro-Denominated Stablecoins Reshaping European Finance

The Changing Landscape of Euro Money Tokens

The global monetary system stands at an inflection point. A landmark joint report by the Oesterreichische Nationalbank (OeNB) and Boston Consulting Group (BCG), published in July 2025, provides the most comprehensive analysis to date of how central bank digital currencies and euro-denominated stablecoins are poised to transform European finance. Titled “Euro Money Tokens: Potential Economic Role of CBDCs and Euro-Denominated Stablecoins,” the report arrives at a critical moment when 134 countries and currency unions — representing 98% of global GDP — are actively exploring CBDC development.

The stablecoin market has surpassed $250 billion globally, yet an extraordinary 98% of these tokens remain pegged to the US dollar. This dollar dominance in digital assets raises fundamental questions about European monetary sovereignty and the euro’s international role. The OeNB-BCG report makes a compelling case that Europe must act decisively to develop its own digital currency infrastructure — both public (the digital euro) and private (MiCA-compliant stablecoins) — to maintain strategic autonomy in an increasingly digitized financial landscape.

For policymakers, financial institutions, and technology leaders seeking to understand the rapidly evolving digital currency environment, this report establishes a framework for how euro money tokens can strengthen Europe’s position in global finance. As the ECB digital euro preparation phase report demonstrates, the groundwork for this transformation is already being laid at the highest institutional levels.

Understanding CBDCs and Euro-Denominated Stablecoins

The OeNB-BCG report begins by establishing clear definitions and classifications for the digital instruments reshaping monetary systems. Euro money tokens broadly encompass two categories: central bank digital currencies (CBDCs) issued by the ECB, and privately issued euro-denominated stablecoins regulated under the Markets in Crypto-Assets (MiCA) framework.

CBDCs come in two forms. The retail digital euro is designed for the general public as a digital complement to physical cash — a risk-free central bank liability that could serve as legal tender across the euro area. The wholesale CBDC, meanwhile, targets financial institutions for settling tokenized securities and large-value transactions in central bank money, operating within existing financial market infrastructure like TARGET.

On the private side, euro-denominated stablecoins fall primarily into two MiCA categories. E-money tokens (EMTs) reference a single official currency and function similarly to electronic money, while asset-referenced tokens (ARTs) may reference multiple currencies or assets. Both require authorization from EU regulatory authorities and must maintain full reserve backing.

What makes the OeNB-BCG analysis particularly valuable is its insistence on viewing these instruments not as competitors but as components of an integrated digital monetary ecosystem. Each token type addresses different use cases and user needs, from everyday consumer payments to sophisticated wholesale financial operations. The report draws on extensive data to demonstrate how current stablecoin usage remains overwhelmingly focused on crypto trading — approximately 88% of transactions — with only about 12% serving real-economy functions such as peer-to-peer transfers, B2B payments, and tokenized asset settlement.

The Digital Euro: Europe’s CBDC Initiative

The digital euro represents the most ambitious public money innovation in the euro area since the introduction of euro banknotes and coins in 2002. According to the OeNB-BCG report, the ECB’s retail CBDC project aims to provide a pan-European digital payment instrument that combines the safety of central bank money with the convenience of digital transactions.

Several design principles define the digital euro’s architecture. First, it will carry potential legal tender status, meaning merchants and service providers across the euro area would be required to accept it. Second, it will be non-remunerated — paying no interest to holders — to avoid competing with bank deposits as a savings instrument. Third, holding limits will constrain the amount any individual can store, preventing large-scale deposit flight from commercial banks to the central bank.

The report highlights that the ECB completed its first preparation phase and scheduled the second phase to begin in October 2025, pending a positive Governing Council decision. This phase will develop and test specific use cases, finalize the digital euro rulebook, and prepare for potential deployment through pan-European infrastructure targeted around 2027.

Financial inclusion emerges as a central motivation. The report cites ECB research showing that approximately 19.5% of EU adults lack access to digital payment tools, while 27% of people aged 16 and older report some level of disability. The digital euro’s offline payment capability and universal accessibility features are designed to address these gaps, ensuring that digital finance does not exclude vulnerable populations. As explored in the World Investment Report on the digital economy, such inclusivity efforts are part of broader global digital transformation trends.

MiCA Regulation and Stablecoin Compliance

Europe’s Markets in Crypto-Assets (MiCA) regulation, fully enforced since 2024, establishes the world’s most comprehensive regulatory framework for stablecoins. The OeNB-BCG report provides a detailed analysis of how MiCA shapes the euro stablecoin landscape and why its provisions are critical for financial stability.

For e-money token (EMT) issuers, MiCA imposes stringent requirements. Reserves must cover 100% of the tokens in circulation, with at least 30% of funds deposited in separate accounts at credit institutions. For “significant” EMTs — those with large market capitalization or wide user adoption — this deposit requirement rises to 60%. Remaining reserves must be invested exclusively in secure, low-risk, highly liquid instruments with minimal market, credit, and concentration risk.

Critically, MiCA prohibits EMT issuers from paying interest or any form of remuneration to token holders. This design choice mirrors the digital euro’s non-remuneration principle and prevents stablecoins from functioning as shadow banking deposits. Token holders must be able to redeem their EMTs at 1:1 par value without fees at any time, ensuring that these instruments maintain their monetary function as a medium of exchange rather than an investment vehicle.

The regulatory framework also addresses cross-border issues. Non-EU stablecoin issuers cannot offer tokens to EU consumers without MiCA compliance or authorization through an EU partner entity. This has already had practical effects: the enforcement of MiCA led to the delisting of non-compliant tokens like USDT for EU users, shifting European trading volumes toward compliant alternatives such as USDC, EURC, and EUROe.

The report emphasizes that MiCA’s passporting rules — allowing authorized issuers in one EU member state to operate across all 27 — create a genuinely single market for regulated stablecoins. This stands in sharp contrast to the fragmented regulatory approaches in the United States and many Asian jurisdictions, giving Europe a potential first-mover advantage in establishing trusted digital currency infrastructure.

Macroeconomic Implications of Euro Money Tokens

Perhaps the most consequential section of the OeNB-BCG report examines the macroeconomic effects of widespread euro money token adoption. The analysis reveals both significant opportunities and risks that demand careful policy calibration.

On the opportunity side, the report identifies over €10 trillion currently held in low-interest bank deposits across the European Union. Tokenization of financial instruments could help mobilize portions of this capital toward productive investment, supporting the Draghi report’s estimate that Europe requires an additional €750–800 billion per year in investment by 2030 to modernize its economy. Euro-denominated stablecoins backed by high-quality European assets could create new channels for capital deployment while strengthening the euro’s international role.

The report reveals a striking data point about the geopolitical dimension of stablecoin reserves: in 2024, stablecoin issuers became the third-largest buyers of US Treasury bills, surpassing many official foreign investors. Research from the Bank for International Settlements (BIS) suggests that $100 billion in foreign purchases of US Treasuries can reduce interest rates by approximately 0.2%. This means that dollar-denominated stablecoins are effectively channeling global savings — including from European users — into financing US government debt, creating an unintended subsidy that Europe’s own stablecoin ecosystem could redirect.

However, the macroeconomic risks are equally significant. Large-scale adoption of CBDCs could trigger deposit substitution — citizens moving savings from commercial bank accounts to digital euro wallets — potentially reducing banks’ deposit base and constraining their ability to provide credit. The report argues that holding limits and non-remuneration policies are essential safeguards against this scenario, ensuring the digital euro complements rather than disrupts traditional banking intermediation.

For stablecoins, the primary macro risk involves redemption dynamics. During market stress, large-scale redemptions could force stablecoin issuers to liquidate reserve assets rapidly, potentially destabilizing short-term money markets. The MiCA requirements for high-quality liquid reserves and regulated custody arrangements are specifically designed to mitigate this procyclical risk. Understanding these dynamics is essential for anyone tracking the asset tokenization trends in capital markets.

Why CBDCs and Stablecoins Are Complementary

The central thesis of the OeNB-BCG report — and arguably its most important contribution to the European policy debate — is that CBDCs and stablecoins should be understood as complementary instruments rather than rivals. This marks a significant departure from earlier discourse that often framed the relationship as antagonistic.

The digital euro, as a central bank-issued instrument, provides irreplaceable public goods: legal tender status, the full faith and credit of the Eurosystem, universal domestic acceptance, and a payments infrastructure independent of private commercial interests. It serves as the digital anchor of the monetary system, much as physical cash does today.

Euro-denominated stablecoins, by contrast, offer capabilities that a CBDC constrained by holding limits and non-remuneration cannot readily provide. These include programmable money features through smart contracts, cross-border payment efficiency beyond the euro area, integration with decentralized finance (DeFi) protocols, and immediate availability for wholesale settlement before the ECB’s own wholesale CBDC infrastructure is fully operational.

The report identifies a practical sequencing argument: euro stablecoins can satisfy immediate market demand for digital euro-denominated instruments — particularly for cross-border and wholesale use cases — while central banks develop the comprehensive infrastructure needed for both retail and wholesale CBDCs. Rather than viewing this as a competition for market share, the OeNB and BCG argue it represents a healthy division of labor between public and private innovation.

This complementarity extends to financial stability. The digital euro provides a risk-free alternative that citizens can turn to during banking crises, while well-regulated stablecoins expand the range of digital payment options without concentrating all digital money issuance in the central bank. The coexistence of both ensures resilience through diversity — no single point of failure can bring down the entire digital payment ecosystem.

Payment and Settlement Applications in the Euro Area

The OeNB-BCG report provides an extensive analysis of practical applications for euro money tokens across the payment and settlement landscape. Current infrastructure, while robust, faces growing demands for speed, interoperability, and cost efficiency that digital tokens are uniquely positioned to address.

In retail payments, the digital euro promises to create a pan-European payment standard that works seamlessly across all 20 euro area member states. Unlike existing card networks dominated by non-European providers, the digital euro would operate on European infrastructure, reducing dependency on external payment systems and their associated fees. The offline payment capability — allowing transactions without internet connectivity — adds a resilience dimension that no existing digital payment method currently offers.

For wholesale settlement, the report focuses on the Eurosystem’s work toward integrating distributed ledger technology (DLT) with existing TARGET infrastructure. The ECB’s Pontes project and related initiatives aim to enable atomic settlement of tokenized securities using central bank money, eliminating counterparty risk and reducing settlement times from days to seconds.

Euro-denominated stablecoins currently fill a critical gap in cross-border payments. The report notes that traditional correspondent banking remains slow and expensive for many cross-border euro transfers, particularly for smaller amounts and emerging market corridors. MiCA-compliant stablecoins operating on public blockchains can process these transfers in minutes at a fraction of the cost, while maintaining full regulatory compliance and consumer protection.

The report also examines the growing use of stablecoins for tokenized real-world asset (RWA) settlement. While only about 3% of current stablecoin transactions involve RWA settlement, this segment is expected to grow rapidly as more financial assets — from bonds to real estate — are tokenized and require efficient on-chain settlement in stable euro-denominated instruments.

Banking Strategy in the Euro Token Ecosystem

One of the most forward-looking sections of the OeNB-BCG report addresses the strategic choices facing European banks in the emerging euro money token ecosystem. The message to the banking sector is unambiguous: engage actively or risk being marginalized.

The report identifies several strategic postures banks can adopt. At the most basic level, banks can serve as distribution partners for the digital euro, providing wallet services and onboarding customers to the ECB’s retail CBDC. This preserves the bank-customer relationship while adding a new service dimension. More ambitiously, banks can become active participants in stablecoin issuance — either launching their own MiCA-compliant euro tokens or partnering with established fintech issuers.

The custody and reserve management opportunity is particularly significant. Under MiCA, EMT issuers must deposit substantial portions of their reserves (30-60%) in regulated bank accounts. For European banks, this represents a new source of stable institutional deposits at a time when traditional deposit gathering faces increasing competition from money market funds and digital alternatives. Banks that position themselves as preferred custody partners for stablecoin reserves can capture meaningful revenue streams.

The report warns, however, that passivity carries genuine risks. If European banks fail to engage with the euro token ecosystem, non-bank fintech companies and international technology firms will fill the vacuum. The resulting disintermediation could erode banks’ central role in the monetary system — not through a single dramatic event, but through gradual loss of relevance as customers increasingly transact through non-bank digital channels. For a broader perspective on how institutions are adapting to these shifts, the Invesco global sovereign asset management study reveals parallel trends in institutional digital asset adoption.

Stablecoin Issuer Business Models Under MiCA

The OeNB-BCG report dedicates significant analysis to the economics of euro stablecoin issuance under MiCA — a crucial topic as the regulatory framework fundamentally shapes viable business models. Since MiCA prohibits paying interest to token holders, issuers must generate revenue from other sources while maintaining the operational infrastructure required for compliance.

The primary revenue stream for EMT issuers comes from reserve management. While token holders receive no interest, issuers earn yield on the reserves backing their tokens. With at least 30% held in bank deposits and the remainder invested in low-risk, liquid instruments such as European government bonds, the spread between reserve yields and zero token-holder remuneration constitutes the core margin. At current European interest rates, this can generate meaningful returns on a large token base.

Secondary revenue streams include transaction fees (typically small basis points per transfer), foreign exchange conversion fees for cross-border payments, and premium services such as programmable payment features and API access for institutional users. Some issuers are also exploring revenue from data analytics and merchant services built around their payment networks, though privacy regulations under both MiCA and GDPR constrain the scope of data monetization.

The report presents a blueprint for a viable euro stablecoin operation, estimating the minimum scale needed for profitability and the infrastructure requirements including compliance systems, reserve management platforms, and distribution partnerships. Notably, the MiCA passporting regime means that once an issuer is authorized in one EU member state, it can serve the entire single market — making the addressable market immediately pan-European and the economies of scale substantial.

The report also examines the competitive dynamics that will shape market structure. While barriers to entry are significant due to capital requirements and regulatory complexity, the European market is expected to support multiple viable euro stablecoin issuers serving different segments — from retail payment-focused tokens to wholesale settlement instruments designed for institutional DeFi and tokenized asset markets.

The Future of Euro Money Tokens and Digital Finance

The OeNB-BCG report concludes with a forward-looking assessment of how euro money tokens will reshape the European financial landscape over the coming years. The trajectory is clear: both public and private digital euro instruments will play increasingly central roles in European economic life.

The immediate priority is expanding the availability of high-quality euro-denominated assets that can serve as eligible backing for stablecoins. The report connects this to broader European initiatives including the Capital Markets Union (CMU) and the Savings and Investments Union (SIU), arguing that a thriving euro stablecoin market requires a deep, liquid pool of European safe assets. The pandemic and fiscal programs have already pushed the combined stock of European safe assets to over €1 trillion by March 2024, but further expansion is needed to support the anticipated growth in tokenized finance.

Infrastructure development remains critical. The Eurosystem’s plans for pan-European digital settlement infrastructure by 2027, including integration of DLT with TARGET systems, will create the rails on which both wholesale CBDCs and institutional stablecoins operate. The report envisions a future where atomic settlement — the simultaneous exchange of tokenized securities and digital money — becomes the standard for European capital markets, dramatically reducing settlement risk and capital requirements.

Cross-border supervisory cooperation emerges as an ongoing challenge. While MiCA establishes clear rules within the EU, the global nature of stablecoin markets means that effective oversight requires coordination with non-EU jurisdictions. The report advocates for strengthened international cooperation to monitor offshore issuers and crypto-asset service providers (CASPs) that may provide EU citizens access to non-compliant tokens.

Perhaps most importantly, the report argues that Europe has a unique window of opportunity. By combining the world’s most advanced stablecoin regulation (MiCA) with a public CBDC project (the digital euro) and robust financial market infrastructure, Europe can establish itself as the global leader in regulated digital money. The complementary nature of these initiatives — public and private, retail and wholesale, domestic and cross-border — creates a comprehensive ecosystem that no other jurisdiction currently matches. As the cybersecurity economics report illustrates, building secure digital infrastructure is equally essential for maintaining trust in these emerging financial systems.