Trust by design: behavioural insights on financial literacy and fraud mitigation in the digital Euro framework

Purpose This study examines the relationship between financial literacy, vulnerability to financial fraud, and perceptions of the digital euro, highlighting their influence on trust and readiness to adopt central bank digital currencies (CBDCs). In particular, it investigates the potential of the digital euro not only as a tool for enhancing the efficiency and security of cross-border payments but also as a means to foster financial inclusion and mitigate fraud-related risks through increased transparency and traceability. Design/methodology/approach The research adopts a quantitative approach using data from a Computer-Assisted Web Interviewing (CAWI) survey. The questionnaire included 38 items on financial literacy, fraud risk, and attitudes toward digital payments, including the digital euro. A total of 502 valid responses were analysed. Chi-square tests were performed to assess associations among categorical variables across demographic groups. Findings Results show that higher financial literacy significantly reduces vulnerability to fraud and promotes more favourable views of the digital euro. Financially literate people are more aware of risks, adopt preventive behaviours and show greater openness to emerging financial technologies. Research limitations/implications The study is limited by its regional scope and cross-sectional design, which can restrict the generalisability of the findings in different cultural and institutional contexts. Future research could employ longitudinal and cross-country analyses using advanced statistical methods to strengthen causal interpretation and capture dynamic changes in financial behaviour. Originality/value The article demonstrates the dual role of financial literacy as both a safeguard against fraud and a catalyst for the adoption of digital currencies, offering insights for policy and education in the evolving European financial landscape.