by Cláudia Ascensão Nunes via the Foundation for Economic Education (FEE),
For
years, the digital euro was presented by the European Central Bank
(ECB) merely as a modern and practical alternative to banknotes and
coins. It has now been openly acknowledged that the project is intended to respond to the dominance of American payment companies. Visa and Mastercard process 61 percent of card payments in the euro area, according to the ECB’s own data, and it is this dependence that Brussels intends to break.
On June 23, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) approved its
negotiating position on the digital euro legislative package by 43
votes to 14. Although this approval does not constitute the final law, a
final agreement with the Council is expected by the end of 2026, with
implementation projected to begin only from 2029 onward.
The
project, which has historically been justified by the ECB as merely a
matter of convenience compared with cash, was this time presented in a
European Parliament statement as a genuinely European payment option,
in an attempt to counter the dominance of major American payment
companies, in what could represent yet another escalation of tensions in
transatlantic relations. Visa and Mastercard’s dominance of
cross-border transactions in Europe generates billions of euros in fees;
a significant reduction in that dominance would weaken the dollar,
represent an economic loss for these American companies, and threaten
one of Washington’s soft-power tools. Whatever the outcome of this
dispute between blocs, it is the European citizen who first bears the
cost of the response chosen by Brussels.
This development
reflects the increasingly protectionist approach that the European Union
has adopted in the technological sphere, as seen with the Digital Markets Act and the recent Tech Sovereignty Package, making open competition and private innovation more difficult. Under
the pretext of defending European sovereignty, Brussels has chosen to
create centralized public infrastructures. But money is not
infrastructure. It is the instrument through which the state and the
citizen negotiate, every day, the boundaries of individual freedom. That
is why, since the beginning of discussions on the digital euro, a
particularly dangerous direction of travel has been emerging.
According
to the negotiating position that has now been approved, it will not be
citizens, but rather the European Commission, acting on a recommendation
from the ECB, that will determine the maximum amount of digital euros
each person may hold, likely around €3,000 (just under $3,500) with
periodic reviews.
In addition, companies will not be allowed to maintain digital euro balances for more than 24 hours, except for accumulating received payments, which must be automatically transferred after that period.
This
prevents businesses from using the digital euro as a treasury
management tool, a liquidity reserve, or for routine payments such as
suppliers and payroll.
Through this rule, Brussels
strengthens centralized state control and significantly reduces the
usefulness of the digital euro for the business sector. Companies lose
freedom and options.
Holding limits and restrictions
imposed on businesses, while shocking to advocates of freedom, are not
new. These ideas have been embedded in the digital euro project since
its initial stages. In the legislative proposal presented by the
European Commission in 2023, the ECB and Brussels explicitly
acknowledged that limits would be imposed on the amount of digital euros
each citizen could hold, under the familiar justification of
“protection,” in this case, protecting financial stability and
preventing deposit flight from commercial banks. The novelty, therefore,
does not lie in the principle but in its implementation. What was in
2023 an open possibility has now become a concrete decision, clearly
made without regard for the wishes of citizens themselves.
These conditions follow the same logic of centralized control found in China’s digital currency, the digital yuan (e-CNY).
In the Chinese system, there is also the possibility of obtaining
higher limits in exchange for surrendering more personal data and accepting less privacy,
a model of “tiered privacy” in which freedom is always sacrificed and
only the degree of submission to the state remains open to choice. Thus,
in order to reduce dependence on American payment companies in the name
of “European sovereignty,” instead of strengthening private competition
and liberalizing the market, Europe is importing the model of state
control that China has refined.
Although the ECB publicly denies
that the digital euro will be a programmable currency, these kinds of
technological and centralized solutions always leave open the
possibility that conditional functionalities may be built upon their
architecture. Money can be made to expire, be conditioned, or be
tracked, transforming it into a public-policy instrument far more
powerful than cash has ever been. To combat an alleged external
dependence on North America, Europe is creating an even more dangerous
internal dependence, one in which money ceases to be an instrument of
individual freedom and open markets, and instead becomes a tool of
control and geopolitical rivalry.
In the end, the digital
euro does not liberate Europe, modernize it, or make payments more
convenient. It merely changes who holds control, shifting it from
American private companies to European public authorities, and
strengthens that control in the process.
At its core,
this project reveals a profound civilizational choice: money ceases to
belong primarily to individuals, as the state assumes the power to
define the limits of financial freedom.
Brussels not only threatens the freedom of its citizens, but also risks escalating transatlantic tensions. A
direct challenge to the dominance of U.S. payment giants and the
dollar’s global infrastructure is unlikely to be ignored passively in
Washington.
The more money is transformed into an
instrument of public policy and geopolitical rivalry, the smaller the
space becomes for individual freedom and open markets.
