Stop the Digital Euro Before it's too Late

by Thorsten Polleit

The political push to introduce a digital euro is associated with very serious dangers to people’s freedom — dangers that are still being massively underestimated. Of course, there is some concern and even criticism here and there regarding the plan to introduce a digital euro. However, the Council of the European Central Bank (ECB), supported by the European political party and bureaucratic class, is pressing ahead undeterred.

On June 23, 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) approved with a large majority another step toward the European legal framework required for the introduction of the “digital euro.” The entire legislative process is scheduled to be completed by the end of 2026. A pilot phase with selected banks and merchants is planned for 2027, and the issuance of the digital euro is scheduled for 2029.

Let us first clarify what central bank digital currency actually is. The monetary system in the euro area runs on two types of money, namely central bank money and commercial bank money.

Central bank money exists in two forms: cash (banknotes and coins) and central bank deposits, which are held primarily by banks at the central bank.

Commercial bank money is created on the basis of central bank money; in fact, commercial banks need central bank money to (i) meet their customers’ cash withdrawal demands, (ii) hold minimum reserves (certain percentage of banks’ customer liabilities must be held in central bank money), and (iii) settle payments among themselves.

Central bank money thus plays a very important role in today’s monetary system — it is, so to speak, the highest-order money, the monetary base. Until now, central bank money in the form of deposits held with the ECB have been reserved almost exclusively for commercial banks. They are the privileged ones allowed to hold accounts at the central bank. The general public is not permitted to do so.

So what is digital central bank money? It refers to central bank money deposits issued by the central bank that private individuals (you and me) are supposed to hold and use. However, private individuals will not hold these funds directly as deposits at the central bank, but rather in an electronic wallet and use them for payments.

It is important to understand that the digital euro is not better money or sound money. Like the existing euro, it is fiat money. It therefore carries all the economic and ethical defects of fiat money: it is inflationary, it causes unfair redistribution of income and wealth, it can be arbitrarily expanded at any time in any amount, and so on.

The adjective “digital,” by the way, is a deceptive packaging. It is probably meant to give the digital euro a special appeal — because most people associate the word “digital” with something modern and progressive and acceptable.

But the truth is that the digital euro is just primitive fiat money. And the vast majority of the existing euro money supply is already digital today anyway: In May 2026, the euro money supply (M3) stood at €17.6 trillion. Of that, €1.6 trillion was cash; the rest consisted of digital deposits at commercial banks. So talking about a “digital euro” is essentially an attempt to make the whole thing sound nicer than it really is and to obscure the problems that come with a fiat digital euro.

The advocates of a digital fiat euro appear to have been successful in advancing their agenda — which would certainly explain why the political process for introducing a digital euro is already operating at full throttle. Let’s ask the key question: Why should there even be a digital euro? Or: Cui bono — who benefits?

The ECB Council promotes the digital euro by claiming it would reduce dependence on American payment services such as Visa, Mastercard, PayPal, etc., and thereby strengthen Europe’s “strategic autonomy”. Upon closer inspection, this argument is not convincing, though. The digital euro is not a competitor to credit card companies. The latter simply don’t care whether payments are settled in U.S. dollars, Japanese yen, British pounds, euros, or digital euros.

And, most importantly, the digital euro cannot replace the credit card! No one can do without credit cards: you need them to rent cars or hotel rooms, to buy airline tickets. Especially for online purchases (e-commerce), credit card payments offer major advantages — such as the “chargeback,” the ability to easily and quickly reverse a payment.

What is more, all payments for which the digital euro is supposedly needed can also be handled by “tokenizing” ordinary commercial bank euros. Tokenization enables conditional payments (“smart contracts,” for example: “Pay only if the goods are delivered”) as well as seamless integration into e-commerce and decentralized-finance-like applications. Tokenizing commercial bank money is actually the most pragmatic and relatively easy-to-implement solution. Tokenized commercial bank money would also be backed by what is considered relatively safe central bank money. No, a digital euro is not needed at all!

In addition, there are many reasons to reject the digital euro outright, because it could have a number of rather disturbing side effects. Since the digital euro is supposed to be available both online and offline, it competes directly with cash, pushes back the use of banknotes and coins, and thereby plays into the hands of those who want to abolish cash anyway. The loss of cash would mean the last remnant of financial privacy for money users would be permanently lost. Not only would money users become completely transparent — because all payments could be made especially easily visible to the state —, but money would also be permanently trapped in the banking sector and could no longer be withdrawn from it. The state and its central bank could then, for example, impose negative interest rates to bail out banks or generate new revenue for the state — an expropriation from which money holders could no longer escape.

Above all, however, the digital euro is programmable. It is technically possible to restrict people’s ability to make payments through politically imposed restrictions: Anyone who becomes politically inconvenient (whether because they eat too much meat, consume too much gasoline, express their opinion freely, or oppose the government) can have their access to the payment system restricted or completely revoked — just as is already practiced today in China with the “Social Credit Score.” This would be especially oppressive if those affected could no longer fall back on cash. In other words: A digital euro paves the way for tyrannical conditions.

In short: From a payment technology viewpoint, the digital euro is unnecessary and dispensable. What is more, a digital euro carries enormous potential for political abuse. The dangers that come with digital central bank currency have actually induced the U.S. government under Donald J. Trump to ban the U.S. central bank (the Fed) from issuing a digital U.S. dollar at the beginning of 2025 and amended the central bank law accordingly.

That said, people should not get fooled by promises that data protection will be guaranteed for all users of the digital euro or that its role in the payment system will be limited (for example, by maximum balance amounts). When you carefully weigh the pros and cons, the conclusion should be obvious: It is best to keep your hands off the digital euro and stop the whole thing before it is too late.

If you would like to know what this means specifically for savers and investors, and what you can and should do now, I recommend reading the BOOM & BUST REPORT. All information is available at boombustreport.com.