The legislators of the European Union, in a vote in Strasbourg, gave the green light to the digital euro on July 8, 2026.
As a result, the European Parliament can begin negotiations with national governments regarding the details of the design and operation of the new currency.
The ECB argues that it is necessary to maintain the benefits of cash in the digital age and protect Europe's monetary sovereignty, while also offering a fast, secure, and widely accepted public means of payment.
However, according to the well-known economist Daniel Lacalle, it does not constitute a neutral or exclusively technological upgrade of European payment infrastructure.
It is a political and technological venture that may integrate surveillance, monetary control, and fiscal sovereignty into the very structure of the currency, the economist argues.
The EU legislators are now debating the regulation that will determine the status, privacy protection framework, and holding limits of the digital euro, while the ECB is openly lobbying for strong legislation to support what it describes as a collective step forward for Europe.
This means that its most important features, including programmable functionality, limits, data access, and the role of commercial banks, will be decided in Brussels and Strasbourg, rather than by the markets or citizen demand.
The ECB presents the digital euro through four key promises: more efficient payments, greater monetary sovereignty, financial inclusion, and a higher level of privacy compared to today's private electronic payment systems.
None of these claims stand up to meaningful scrutiny, even for a moment.
Let us examine them one by one.
Efficiency and universal acceptance
Europe already has instant payment systems, multiple card systems, and a dense network of private providers that enable fast, cheap electronic transactions across the eurozone and internationally.
There is no indication that adding a centralized, programmable central bank account for every citizen solves a problem that existing infrastructure cannot address through open competition, decentralized independent choices, and innovation, Lacalle notes.
Monetary sovereignty and autonomy
The ECB argues that the digital euro is necessary to maintain the autonomy of the monetary system and reduce reliance on non-European providers.
This does not seem to make much sense at a time when the role of the euro as the second-largest global reserve currency is widely accepted, demand for euro-denominated assets remains strong, and various private and independent initiatives already exist that successfully compete with non-European providers.
The role of a currency as a reserve asset, as well as the success of domestic payment systems against international alternatives, are achieved not through enforcement, but through the trust and demand of citizens and businesses.
If the European Central Bank (ECB) truly wanted to preserve the purchasing power and credibility of the euro, it would not need legal privileges or an imposed digital form to remain globally significant.
Resorting to a central bank digital currency (CBDC) is an admission of weakness, not strength.
Financial inclusion
Retail central bank digital currencies (retail CBDCs) are presented as free, basic tools for those who lack access to banking services.
However, in Europe, financial exclusion is driven more by regulation, taxation, and economic stagnation than by a lack of digital payment options.
Imposing a centralized wallet linked to identity does not address these structural barriers.
Furthermore, financial inclusion does not require a digital identity and a centralized account at the central bank, it requires more competition and decentralized private options.
More private than commercial solutions
The ECB promises a high level of privacy, with allegedly anonymized data, despite the digital identity requirement, as well as offline payments that are supposed to closely resemble the use of cash.
However, the architecture of a programmable, centrally controlled CBDC, governed by a central bank that openly integrates political objectives into its policymaking tools, means that every transaction is, by design, potentially subject to monitoring and even sanctions.
If the main objectives were efficiency, competition, and technological progress, regulatory authorities would strengthen independent, decentralized solutions, independent payment providers, and open standards, rather than concentrating the entire monetary policy transmission mechanism in a single public institution.
If the ECB believes that all Europeans should have the option to choose the digital euro, it simply needs to make it widely available and let citizens decide, rather than imposing it.
Monetary sovereignty is not achieved through coercion, but through freedom and growing demand.
The euro is not in danger of losing its status as a reserve currency, unless the goal is to destroy the purchasing power of money and mandate its use regardless of citizen choice.
The argument used by the ECB and proponents of the digital euro, according to which there is a "lost opportunity" due to the billions of euros invested in the United States instead of the European Union, has no logical basis.
European investors choose to invest globally and, if all capital does not remain in the European Union, this is a consequence of stagnation, over-regulation, and lack of opportunity.
Furthermore, the ECB cannot expect to maintain a global reserve currency if most of the money it issues is intended to be used only domestically.
This, in itself, undermines the status of a reserve currency.
The risk of using monetary policy to further inflate government spending, beyond current levels, now becomes a central issue.
Monetary policy will not restrain government excesses, on the contrary, it will fuel them even more than today, with savers holding deposits and prudent investors being the main losers.
The issue is control – Three dangerous channels
According to Lacalle, a central bank digital currency (CBDC) is not just electronic money.
The key difference between today's electronic money and a central bank digital euro is not digitalization, but control.
In the existing system, deposits are held at commercial banks, which act as intermediaries, take risks, and maintain a degree of separation between monetary authorities and individual transactions, even within the limits set by regulations and legislation.
With a CBDC, your primary account would essentially be at the central bank.
This creates three dangerous channels of power.
Central banks will gain direct and real-time access to virtually all transactions, eliminating the remaining level of financial privacy that cash and bank intermediation still provide.
When every payment is recorded in a centralized system, authorities can monitor behavioral patterns, flag unwanted actions, and build profiles far beyond legitimate law enforcement needs.
Programmability is a key issue in the architecture of CBDCs.
Central bank digital currencies can be designed as programmable money, allowing authorities to increase or decrease balances, restrict where and for what purpose money can be used, and impose expiration dates or penalties for behaviors deemed harmful: from "excessive" fuel consumption to spending considered politically undesirable.
This is not mere speculation.
The European Central Bank (ECB) itself emphasizes programmability as a way to make the transmission of monetary policy more flexible, which means faster inflation creation and faster withdrawal of liquidity when central planners decide they have overstimulated the economy.
By eliminating the safeguards provided by commercial banking and the demand for credit, central banks can channel liquidity directly into citizens' accounts, merging monetary and fiscal policy.
This removes the constraints that bank lending and market discipline impose on government deficits, turning the currency into a tool for rapid and largely unchecked funding of state budgets.
In such a context, the digital euro does not simply enhance the currency, it attempts to impose its use.
That is why the ECB, Lacalle says, insists that the Authorities must ensure its acceptance through regulations, tax obligations, and legal tender rules.
European commercial banks are justifiably worried about the prospect of a risk-free digital euro account at the ECB, which would compete with deposits and essentially turn banks into even more dependent subsidiaries of the central bank.
Legislators and supervisors are already discussing individual holding limits of around 3,000 euros per person to limit the outflow of funds from bank balance sheets.
However, this amount is a political choice rather than an economic necessity, and it can be revised at any time.
Even with limits in place, the presence of an alternative to deposits mandated by the central bank will weaken funding stability, increase the cost of raising capital, and push banks even further into a marginal role in credit creation.
This has significant consequences, the prominent economist argues.
A complete misunderstanding of the nature of money
Today, inflationary phenomena are at least filtered through banks' appetite for risk-taking and the demand for credit.
A digital euro allows the central bank to increase or decrease the money supply directly in the digital wallets of households and businesses, eliminating constraints and turning the currency into a pure tool of political priorities, climate goals, industrial policy, or social engineering.
Furthermore, its very programming architecture creates a distorted incentive that penalizes prudent saving and conservative investment choices.
A complete misunderstanding of the nature of money has damaged the entire mechanism.
It treats deposits as "unused money" when in fact all deposits are invested, and it views the investment of euro capital abroad as a negative phenomenon, rather than recognizing that the global, open, and free use of the currency is precisely what supports its role as a reserve currency.
Formal independence and privacy laws are weak safeguards when the institution has already repeatedly succumbed to political pressure to finance bloated states and tolerate persistent inflation.
A central bank digital currency (CBDC) amplifies this problem, adding the risk of social control to the macroeconomic manipulation of monetary policy.
The result is a currency that is easier to use, harder to avoid, and more vulnerable to arbitrary political control.
If European policymakers truly desired a stronger and more reliable euro, their plan would be completely different.
They would promote decentralized and competitive payment systems, allowing independent providers, banks, and fintech companies to innovate without being subjected to a centralized, politically designed CBDC.
They would focus on restoring the euro's function as a store of value, ending the monetization of persistent fiscal deficits, rather than integrating these deficits into a programmable currency.
And they would protect cash and private electronic money as essential tools of financial privacy and individual freedom, not as annoying relics to be eliminated.
The announced contracts with major tech companies and an aggressive legislative agenda suggest that the real goal is to build the infrastructure for future social control, political engineering, and direct monetary financing of government spending.
Surveillance disguised as money, Daniel Lacalle concludes.
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