March 27, 2025
Source: Naked Capitalism
Digital Euro Source: Alesia Kozik. Pexels.
Imagine a technology that could facilitate an unprecedented expansion of totalitarian power in the hands of the ECB and EU Commission. What could possibly go wrong?
If you are a citizen of one of the Euro Area’s 20 member nations and are wondering why the legacy media is suddenly awash with articles on the European Central Bank’s proposed digital euro after studiously ignoring its development over the past six years, there is a simple reason: the digital euro is closer than ever to becoming a reality — at least according to own architects.
In fact, the two main EU institutions driving its development, the European Central Bank (ECB) and the European Commission, are, if anything, determined to accelerate its roll out. Which kind of makes you wonder: why all the rush?
With the “preparation phase” of the digital euro scheduled to end in October and since the European Central Bank and the European Commission need the European Parliament, the EU’s rubber stamping chamber legislative assembly, to approve the definitive legal framework for the bloc’s proposed central bank digital currency, or CBDC, the time has finally come to sell the project to the people — with the help, of course, of the legacy media and news agencies.
However, it is not easy to sell a project that is broadly seen, even by many politicians and some central bank insiders around the world, not only as a “solution in search of a problem” but one that is fraught with risks. Even the German MEP appointed to lead the European Parliament’s legislative push for a digital euro, the Rapporteur Stefan Berger, become one of its fiercest critics, eventually stepping down from the role.
According to the German financial journalist Norbert Häring, the only identifiable function of the digital euro is to “help displace cash and bring Europe closer to total digital surveillance.” So, how do you sell a project whose advocates (in the words of Federal Reserve Governor Christopher Waller) “often fail to ask a simple question: What problem would a CBDC solve?”
The answer, it seems, at least in the case of the Euro Area, is to generate as much fear as possible about Europe’s dependence on US payments providers at a time when the US is increasingly viewed as hostile to Europe. Lagarde says that the digital euro is necessary in order to preserve Europe’s monetary sovereignty — oh, the irony. Last week, the European Central Bank chief economist Philip Lane warned about the risks of Europe’s outsized dependence on American payment providers leaving it open to future economic coercion. From Reuters:
“Europe’s reliance on foreign payment providers has reached striking levels,” Lane said in a speech in Cork, Ireland. “This dependence exposes Europe to risks of economic pressure and coercion and has implications for our strategic autonomy, limiting our ability to control critical aspects of our financial infrastructure.”
“We are witnessing a global shift towards a more multipolar monetary system, with payments systems and currencies increasingly wielded as instruments of geopolitical influence,” he said.
He warned that national card schemes have been entirely replaced by international alternatives in 13 of the euro zone’s 20 countries, making it imperative that the ECB pushed ahead with issuing a digital currency.
“The digital euro is a promising solution to counter these risks and ensure the euro area retains control over its financial future,” Lane said.[1]
And here comes the first big lie from the Reuters piece:
A digital euro would function much like cash, allowing people to make direct retail payments without relying on a card service provider.
This could not be further from the truth (as we will explain in point #2 below), but it sure sounds reassuring to EU citizens who continue to trust the word of the media on matters of great import. And there are few matters more important than the system of money we live and work under.
As we warned back in 2022, the mass development and rollout of central bank digital currencies would represent (and this, I believe, is not hyperbole) a financial revolution that threatens to radically reconfigure the very nature of money itself. And let’s be clear: this will not be a bottom-up revolution. There are no European citizens marching in the streets calling for a digital euro, for the simple reason that most people already believe they are using a digital euro currency every time they pull out their card or mobile phone.
But there are some key differences between the ECB’s proposed digital euro, and the digital euro currency currently in use. For a start, the former will be money issued by the state, via the central bank (though it will still be commercial banks that manage all the customer-facing activities) and users will be allowed to hold a maximum deposit of 3,000 euros at any one time [2]. The latter, meanwhile, is private money issued and managed by commercial banks.
As the use of cash has declined, in part because of the war waged upon it by the EU Commission and the ECB, the amount of public money in the economy has also declined. Now, the ECB and Commission want to reverse this dynamic by issuing their own CBDC. But this will have potentially far-reaching implications that should give all EU citizens pause. Here are five of the most important reasons why we should be terrified of the fast approaching launch of the ECB’s digital euro:
1. The Digital Euro Could (And Almost Certainly Will) Be Used As a Tool of Financial Surveillance and Control.
A central bank digital currency system will technically no longer require middlemen such as banks or credit card companies. That said, Europe’s largest financial institutions, many of which have been helping to build the architecture for the CBDC system, will find a new role in the new digital reality. This probably explains why the ECB is so keen on further consolidation in Europe’s banking sector: once the digital euro is firmly established, there will be even less need for choice and competition within the banking sector.
As the ECB noted in a press release last December, “Supervised intermediaries, such as banks, would play a key role in distributing the digital euro. They would act as the main point of contact for individuals, merchants and businesses for all digital euro-related issues and would perform all end-user services.”
Meanwhile, the ECB, like all central banks that end up launching a CBDC, will retain oversight and control over the creation, destruction, and movement of money, just as Agustin Carstens, general manager of the Bank of International Settlements, put it at a 2020 summit of the IMF:
“We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control [over] the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that.”
It is not just the prospect of the ECB and the Commission being able to track, trace and monitor all of our financial activity — what we earn, how we spend, what we save — that should terrify us; it is also the prospect of them being able to “program” money so as to achieve certain monetary, fiscal or social policy objectives.
In a fully cashless digital-euro system, the central bank and Commission would have a complete record of every transaction made by everyone, allowing it to essentially eradicate tax evasion. The potential applications go far beyond that, notes NS Lyons, a Washington DC-based consultant and analyst in his 2022 article CBDC Caution: A Central-Bank-Issued Digital Dollar Could Enable a Dark Future:
Fines, such as for speeding or jaywalking, could be levied in real time, if CBDC accounts were connected to a network of “smart city” surveillance. Nor would there be any need to mail out stimulus checks, tax refunds, or other benefits, such as universal basic income payments. Such money could just be deposited directly into accounts. But a CBDC would allow government to operate at much higher resolution than that if it wished. Targeted microfinance grants, added straight to the accounts of those people and businesses considered especially deserving, would be a relatively simple proposition.
Other potential forms of programming applications include setting expiry dates for stimulus funds or welfare payments to encourage users to spend it quickly in order to boost economic activity. It would be a central banker’s wet dream. Programmable money could also be used to encourage the right sorts of consumption and discourage or even prevent the wrong sorts. Taken to the extreme, governments could use CBDCs to exclude the deplorables and undesirables from the economy altogether.
As independent media outlets like this one have shone an ever brighter spotlight on the potential dangers of programmable money, the ECB has shifted its stance, claiming now that it will not use programmable money. But at the same time it has relabelled programmable money as “conditional payments” and appears to have given the job of programming these payments to the payment service providers who will be managing all customer-facing activities.
As Lyons warns, CBDCs, “if not deliberately and carefully constrained in advance by law,… have the potential to become even more than a technocratic central planner’s dream. They could represent the single greatest expansion of totalitarian power in history.” Imagine that power in the hands of the likes of Ursula von der Leyen and Christine Lagarde!
2. It Will Probably Accelerate the Demise of Cash… and By Extension, Financial Privacy.
The ECB, like the EU Commission, insists that a central bank-issued digital euro will co-exist alongside cash for many years, if not decades, to come. As we’ve noted in previous articles, cash, while in gradual decline in the EU, is still widely supported and used in many member states, particularly Germany and Austria. Also, as the near-cashless nirvanas of Scandinavia are discovering, cash offers payment systems greater resilience, particularly in times of war and rising cyber theft.
However, will cash enjoy a level-playing field with a digital euro? It’s unlikely.
Both the ECB and the Commission spearheaded Europe’s War on Cash from around 2011, going so far as to impose cash caps of 1,000 euros in Italy and 500 euros in Greece during its flirtation with Grexit. Although the ECB appears to have undergone a change of heart in recent years, even going so far as to introduce a 2023 directive aimed at protecting the right to use cash in retail settings the EU, it is impossible to know whether this is genuine or merely a position of convenience given cash’s ongoing popularity among many European publics and the intended roll out of a direct competitor in the form of the digital euro.
ECB president Christine Lagarde is anything but cash friendly. Also, banks, arguably the biggest enemies of cash, have been broadly excluded from any EU legislation aimed at preserving cash.
My guess is that once introduced, a digital euro will gradually confer more and more financial perks and benefits to those who use it. This is exactly what the Bank of Nigeria did in 2022 when it launched the eNaira, the world’s first CBDC of a largeish economy. And when that didn’t work it switched from carrot to stick, even going so far as to remove over half of all the cash notes used in the economy, causing a sharp recession. Yet even that didn’t work, and by September last year Nigerians were using more cash than before while the eNaira continued to founder.
Presumably, the EU has learnt from these embarrassing failures, and European governments (with the obvious exception of Austria) will continue with their death-by-a-thousand-cuts assassination of cash. If the ECB, EU Commission and national EU member governments were to accelerate cash’s demise by penalizing its use (while incentivizing the use of CBDCs), we would witness the loss of one of the last vestiges of financial freedom, privacy and anonymity.
The ECB and its national member banks insist that a digital euro will help to protect financial privacy, but if you believe that, I’ve got a digital bridge to sell you. Even the ECB itself has repeatedly stated that the financial privacy offered by a digital euro will be strictly limited. From Ledger Insights:
It’s worth noting that there will be two versions of the digital euro. The offline version aims to be as close to cash as possible and is designed for smaller payments. Online payments are closer to typical card or bank payments today…
The recent European elections show that future national governments could be very different from our current ones. Given Europe’s World War II history, it’s not a stretch to ponder what might happen in a less benevolent world. What if the digital euro has real traction and cash is barely used? How easy would it be to change the digital euro system to break the privacy protections currently being carefully crafted?
For the offline digital euro, transactions would remain private, but preventing people from topping up their wallets would be easy. In the case of the online digital euro case, a law change and a relatively small change in data access would probably suffice to undermine the privacy design completely.
Designing a CBDC to account for every future unpleasant scenario is likely impossible for central banks. Dooms Day scenarios aside, the ECB is making a concerted attempt to protect privacy.
That may be true today but will it be true tomorrow? This brings us to the third reason why European citizens should be terrified of a digital euro…
3. The EU’s Word Cannot Be Trusted.
The EU institutions are constantly breaking even their own rules and regulations. Witness the way the Commission President Ursula von der Leyen has run roughshod over the EU’s transparency and accountability rules in the Pfizergate scandal without facing any consequences. Or the way the Digital Services Act contravenes the EU’s own laws on freedom of expression and information, including Article 11 of the EU Charter of Fundamental Rights.
Or indeed the way the Commission has essentially carried out a coup in Romania to prevent a politician who is opposed to project Ukraine from gaining power, and is now secretly interfering in the Polish election campaign, using taxpayers’ money and instruments developed by the military and intelligence services, according to the German journalist Norbert Häring.
What this should all tell us is that any pledges by the ECB and the Commission to safeguard cash, to respect financial privacy, and to not use programmable money applications once the digital euro is live are essentially worthless. The EU can change the rules of the game whenever it wants and however it wants, as it has been doing since its inception.
And that prospect should terrify EU citizens given that the driving mission of the EU is to accrue to itself more and more centralised power and control over Europe’s citizenry, businesses, societies and economies. As Brussels has consolidated power over the EU economy, the performance of that economy has been underwhelming, particularly since the self-inflicted energy crunch caused by the 16 rounds of sanctions the EU has (so far) imposed on Russia. Which brings us to the next point…
4. The EU Needs Your Money…
…to fund its remilitarisation. And taxpayer funds and further expansions of public debt alone will not be enough to finance its ambitions. Indeed, the EU’s plan to borrow €800 billion for defence was rejected by the Dutch Parliament. Just a few days ago, the European Commission announced the launch of yet another union, the “Savings and Investment Union”, aimed at channelling trillions of euros of European savings into the coffers of a new generation of innovative European companies — primarily, of course, in the arms business. From Euronews:
The European Commission unveiled on Monday a plan to better channel up to €10 trillion in bank deposits across the bloc into much-needed strategic investments.
“Currently, too few European citizens make a decent return on their hard-earned savings, at least not in a simple and cost-efficient way,” EU Commissioner for Financial Services Maria Luis Albuquerque told reporters in Brussels. “This is regrettable and represents a loss to us all,” she added.
In other times of widespread war, European and North American governments have been able to raise funds by selling war bonds to the citizenry. But that has tended to work only when the government of the day and its war effort enjoy a minimal level of popularity. That is unlikely to be the case with the EU’s attempts to keep project Ukraine alive. So, instead, Brussels is seeking to rewrite its own regulations, primarily aimed at protecting investors, in order to make it easier for investment funds to invest in arms manufacturers, including in securitised assets.
This plan appears to have been in the pipeline for some time. Just over a year ago, France’s Minister for the Economy Bruno Le Maire declared that Europe does not have sufficient funds and needs to “mobilize all of Europeans’ savings – 35 trillion euros – to finance the climate transition, fund our defence efforts, and invest in artificial intelligence.”
The fact that an increasingly militarised EU is openly coveting its citizens vast savings pool and is willing to significantly water down investment protections in order to get it should also set off alarm bells wrt its digital euro plans. If the ECB and EU Commission are able to successfully launch a digital euro (still a big “IF” since no G20 central bank has managed to pull it off), they will have far greater control over our funds. And to gain easier access to those funds, all they would need to do is rewrite the rules.
5. The Digital Euro Will Go Hand in Hand With the Digital Identity Wallet.
Most EU citizens are probably blissfully unaware that the EU launched its digital identity legislation last year, and that by 2026 all be required to offer at least one EU Digital Identity Wallet to all citizens, residents, and businesses. As the FT reported back in 2021, CBDCs will almost certainly have to go hand in hand with digital IDs:
“What CBDC research and experimentation appears to be showing is that it will be nigh on impossible to issue such currencies outside of a comprehensive national digital ID management system. Meaning: CBDCs will likely be tied to personal accounts that include personal data, credit history and other forms of relevant information.”
Combining digital currencies with digital IDs while phasing out, or even banning, the use of cash would grant governments and central banks the ability not only to track every purchase we make but also to determine what we can and cannot spend our money on. They could also be used to strongly encourage “desirable” social and political behaviour while penalizing those who do not toe the line. Imagine that power in the hands of Eurocrats like Von der Leyen!
The positive news is that the future success of the ECB’s digital euro depends primarily on the citizenry. As happened in Nigeria, we will have the choice as to whether to accept it or not, as notes the German independent media outlet Multipolar:
[W]hen the exclusive characteristics of cash and the consequences of its replacement come into public awareness, citizens can make a conscious decision at the checkout whether to pay digitally and thus work towards the disappearance of cash, or whether to use notes and coins and thus contribute to future generations being able to take advantage of the properties of cash.
Those properties include “the freedom to hold taxed income in one’s own hands,… anonymity when paying, the ability to transact in the event of technical failures, and better control over one’s own spending, promotion of a disciplined approach to money even for children, inclusion of people with visual impairments, Down’s syndrome and other disabilities, the possibility of earning money independently without first opening a bank account, and escape from the fees of the financial industry.”
[1] It is hardly surprising that the ECB is using this argument as its prime justification for accelerating the launch of the digital euro. For a start, anti-Trump feeling is strong both among EU politicians and the broader European public right now. Also, the argument is nothing new. In fact, the most commonly cited justification for launching CBDCs going all the way back to 2019 is as a means of countering the risks posed by so-called “stablecoins” like Meta’s proposed Libra coin.
[2] This 3,000 euro holding limit is considered low enough to mitigate the risk of deposit flight from commercial bank deposits to the CBDC accounts leading to a dangerous outflow of capital from the commercial banking system, resulting ultimately in bank runs and collapses. The last thing the world’s central banks want to do is disintermediate large private banks, whose interests they tend to serve above all else.
In fact, central banks have been working hand-in-glove with many TBTF lenders (JP Morgan Chase, Goldman Sachs, HSBC, BNP Paribas, BBVA…) to set up and road test the CBDC infrastructure. If any financial institutions are going to be “disintermediated”, it will probably be small, local banks and credit unions, which will not be able to cope with the added layers of regulatory costs, burdens and complexities.
According to a December 2023 report commissioned by the European Banking Association, a holding limit at 3,000 euro could realistically lead to an outflow of up to 739 billion euro of bank deposits in the euro area — equivalent to a loss of 10% of the total household deposit base and 3% of the total bank liabilities. And it is smaller banks that will feel the most pain:
Such deposit runs might especially hit smaller banks for two reasons. First, customers in smaller banks tend to have lower levels of deposits. Hence the holding limit will bind fewer customers, leading to a larger share of deposits being withdrawn from smaller banks than larger banks. Second, deposit funding typically makes up for a larger share of the funding for smaller banks.
Digital Euro Source: Alesia Kozik. Pexels.
Imagine a technology that could facilitate an unprecedented expansion of totalitarian power in the hands of the ECB and EU Commission. What could possibly go wrong?
If you are a citizen of one of the Euro Area’s 20 member nations and are wondering why the legacy media is suddenly awash with articles on the European Central Bank’s proposed digital euro after studiously ignoring its development over the past six years, there is a simple reason: the digital euro is closer than ever to becoming a reality — at least according to own architects.
In fact, the two main EU institutions driving its development, the European Central Bank (ECB) and the European Commission, are, if anything, determined to accelerate its roll out. Which kind of makes you wonder: why all the rush?
With the “preparation phase” of the digital euro scheduled to end in October and since the European Central Bank and the European Commission need the European Parliament, the EU’s rubber stamping chamber legislative assembly, to approve the definitive legal framework for the bloc’s proposed central bank digital currency, or CBDC, the time has finally come to sell the project to the people — with the help, of course, of the legacy media and news agencies.
However, it is not easy to sell a project that is broadly seen, even by many politicians and some central bank insiders around the world, not only as a “solution in search of a problem” but one that is fraught with risks. Even the German MEP appointed to lead the European Parliament’s legislative push for a digital euro, the Rapporteur Stefan Berger, become one of its fiercest critics, eventually stepping down from the role.
According to the German financial journalist Norbert Häring, the only identifiable function of the digital euro is to “help displace cash and bring Europe closer to total digital surveillance.” So, how do you sell a project whose advocates (in the words of Federal Reserve Governor Christopher Waller) “often fail to ask a simple question: What problem would a CBDC solve?”
The answer, it seems, at least in the case of the Euro Area, is to generate as much fear as possible about Europe’s dependence on US payments providers at a time when the US is increasingly viewed as hostile to Europe. Lagarde says that the digital euro is necessary in order to preserve Europe’s monetary sovereignty — oh, the irony. Last week, the European Central Bank chief economist Philip Lane warned about the risks of Europe’s outsized dependence on American payment providers leaving it open to future economic coercion. From Reuters:
“Europe’s reliance on foreign payment providers has reached striking levels,” Lane said in a speech in Cork, Ireland. “This dependence exposes Europe to risks of economic pressure and coercion and has implications for our strategic autonomy, limiting our ability to control critical aspects of our financial infrastructure.”
“We are witnessing a global shift towards a more multipolar monetary system, with payments systems and currencies increasingly wielded as instruments of geopolitical influence,” he said.
He warned that national card schemes have been entirely replaced by international alternatives in 13 of the euro zone’s 20 countries, making it imperative that the ECB pushed ahead with issuing a digital currency.
“The digital euro is a promising solution to counter these risks and ensure the euro area retains control over its financial future,” Lane said.[1]
And here comes the first big lie from the Reuters piece:
A digital euro would function much like cash, allowing people to make direct retail payments without relying on a card service provider.
This could not be further from the truth (as we will explain in point #2 below), but it sure sounds reassuring to EU citizens who continue to trust the word of the media on matters of great import. And there are few matters more important than the system of money we live and work under.
As we warned back in 2022, the mass development and rollout of central bank digital currencies would represent (and this, I believe, is not hyperbole) a financial revolution that threatens to radically reconfigure the very nature of money itself. And let’s be clear: this will not be a bottom-up revolution. There are no European citizens marching in the streets calling for a digital euro, for the simple reason that most people already believe they are using a digital euro currency every time they pull out their card or mobile phone.
But there are some key differences between the ECB’s proposed digital euro, and the digital euro currency currently in use. For a start, the former will be money issued by the state, via the central bank (though it will still be commercial banks that manage all the customer-facing activities) and users will be allowed to hold a maximum deposit of 3,000 euros at any one time [2]. The latter, meanwhile, is private money issued and managed by commercial banks.
As the use of cash has declined, in part because of the war waged upon it by the EU Commission and the ECB, the amount of public money in the economy has also declined. Now, the ECB and Commission want to reverse this dynamic by issuing their own CBDC. But this will have potentially far-reaching implications that should give all EU citizens pause. Here are five of the most important reasons why we should be terrified of the fast approaching launch of the ECB’s digital euro:
1. The Digital Euro Could (And Almost Certainly Will) Be Used As a Tool of Financial Surveillance and Control.
A central bank digital currency system will technically no longer require middlemen such as banks or credit card companies. That said, Europe’s largest financial institutions, many of which have been helping to build the architecture for the CBDC system, will find a new role in the new digital reality. This probably explains why the ECB is so keen on further consolidation in Europe’s banking sector: once the digital euro is firmly established, there will be even less need for choice and competition within the banking sector.
As the ECB noted in a press release last December, “Supervised intermediaries, such as banks, would play a key role in distributing the digital euro. They would act as the main point of contact for individuals, merchants and businesses for all digital euro-related issues and would perform all end-user services.”
Meanwhile, the ECB, like all central banks that end up launching a CBDC, will retain oversight and control over the creation, destruction, and movement of money, just as Agustin Carstens, general manager of the Bank of International Settlements, put it at a 2020 summit of the IMF:
“We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control [over] the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that.”
It is not just the prospect of the ECB and the Commission being able to track, trace and monitor all of our financial activity — what we earn, how we spend, what we save — that should terrify us; it is also the prospect of them being able to “program” money so as to achieve certain monetary, fiscal or social policy objectives.
In a fully cashless digital-euro system, the central bank and Commission would have a complete record of every transaction made by everyone, allowing it to essentially eradicate tax evasion. The potential applications go far beyond that, notes NS Lyons, a Washington DC-based consultant and analyst in his 2022 article CBDC Caution: A Central-Bank-Issued Digital Dollar Could Enable a Dark Future:
Fines, such as for speeding or jaywalking, could be levied in real time, if CBDC accounts were connected to a network of “smart city” surveillance. Nor would there be any need to mail out stimulus checks, tax refunds, or other benefits, such as universal basic income payments. Such money could just be deposited directly into accounts. But a CBDC would allow government to operate at much higher resolution than that if it wished. Targeted microfinance grants, added straight to the accounts of those people and businesses considered especially deserving, would be a relatively simple proposition.
Other potential forms of programming applications include setting expiry dates for stimulus funds or welfare payments to encourage users to spend it quickly in order to boost economic activity. It would be a central banker’s wet dream. Programmable money could also be used to encourage the right sorts of consumption and discourage or even prevent the wrong sorts. Taken to the extreme, governments could use CBDCs to exclude the deplorables and undesirables from the economy altogether.
As independent media outlets like this one have shone an ever brighter spotlight on the potential dangers of programmable money, the ECB has shifted its stance, claiming now that it will not use programmable money. But at the same time it has relabelled programmable money as “conditional payments” and appears to have given the job of programming these payments to the payment service providers who will be managing all customer-facing activities.
As Lyons warns, CBDCs, “if not deliberately and carefully constrained in advance by law,… have the potential to become even more than a technocratic central planner’s dream. They could represent the single greatest expansion of totalitarian power in history.” Imagine that power in the hands of the likes of Ursula von der Leyen and Christine Lagarde!
2. It Will Probably Accelerate the Demise of Cash… and By Extension, Financial Privacy.
The ECB, like the EU Commission, insists that a central bank-issued digital euro will co-exist alongside cash for many years, if not decades, to come. As we’ve noted in previous articles, cash, while in gradual decline in the EU, is still widely supported and used in many member states, particularly Germany and Austria. Also, as the near-cashless nirvanas of Scandinavia are discovering, cash offers payment systems greater resilience, particularly in times of war and rising cyber theft.
However, will cash enjoy a level-playing field with a digital euro? It’s unlikely.
Both the ECB and the Commission spearheaded Europe’s War on Cash from around 2011, going so far as to impose cash caps of 1,000 euros in Italy and 500 euros in Greece during its flirtation with Grexit. Although the ECB appears to have undergone a change of heart in recent years, even going so far as to introduce a 2023 directive aimed at protecting the right to use cash in retail settings the EU, it is impossible to know whether this is genuine or merely a position of convenience given cash’s ongoing popularity among many European publics and the intended roll out of a direct competitor in the form of the digital euro.
ECB president Christine Lagarde is anything but cash friendly. Also, banks, arguably the biggest enemies of cash, have been broadly excluded from any EU legislation aimed at preserving cash.
My guess is that once introduced, a digital euro will gradually confer more and more financial perks and benefits to those who use it. This is exactly what the Bank of Nigeria did in 2022 when it launched the eNaira, the world’s first CBDC of a largeish economy. And when that didn’t work it switched from carrot to stick, even going so far as to remove over half of all the cash notes used in the economy, causing a sharp recession. Yet even that didn’t work, and by September last year Nigerians were using more cash than before while the eNaira continued to founder.
Presumably, the EU has learnt from these embarrassing failures, and European governments (with the obvious exception of Austria) will continue with their death-by-a-thousand-cuts assassination of cash. If the ECB, EU Commission and national EU member governments were to accelerate cash’s demise by penalizing its use (while incentivizing the use of CBDCs), we would witness the loss of one of the last vestiges of financial freedom, privacy and anonymity.
The ECB and its national member banks insist that a digital euro will help to protect financial privacy, but if you believe that, I’ve got a digital bridge to sell you. Even the ECB itself has repeatedly stated that the financial privacy offered by a digital euro will be strictly limited. From Ledger Insights:
It’s worth noting that there will be two versions of the digital euro. The offline version aims to be as close to cash as possible and is designed for smaller payments. Online payments are closer to typical card or bank payments today…
The recent European elections show that future national governments could be very different from our current ones. Given Europe’s World War II history, it’s not a stretch to ponder what might happen in a less benevolent world. What if the digital euro has real traction and cash is barely used? How easy would it be to change the digital euro system to break the privacy protections currently being carefully crafted?
For the offline digital euro, transactions would remain private, but preventing people from topping up their wallets would be easy. In the case of the online digital euro case, a law change and a relatively small change in data access would probably suffice to undermine the privacy design completely.
Designing a CBDC to account for every future unpleasant scenario is likely impossible for central banks. Dooms Day scenarios aside, the ECB is making a concerted attempt to protect privacy.
That may be true today but will it be true tomorrow? This brings us to the third reason why European citizens should be terrified of a digital euro…
3. The EU’s Word Cannot Be Trusted.
The EU institutions are constantly breaking even their own rules and regulations. Witness the way the Commission President Ursula von der Leyen has run roughshod over the EU’s transparency and accountability rules in the Pfizergate scandal without facing any consequences. Or the way the Digital Services Act contravenes the EU’s own laws on freedom of expression and information, including Article 11 of the EU Charter of Fundamental Rights.
Or indeed the way the Commission has essentially carried out a coup in Romania to prevent a politician who is opposed to project Ukraine from gaining power, and is now secretly interfering in the Polish election campaign, using taxpayers’ money and instruments developed by the military and intelligence services, according to the German journalist Norbert Häring.
What this should all tell us is that any pledges by the ECB and the Commission to safeguard cash, to respect financial privacy, and to not use programmable money applications once the digital euro is live are essentially worthless. The EU can change the rules of the game whenever it wants and however it wants, as it has been doing since its inception.
And that prospect should terrify EU citizens given that the driving mission of the EU is to accrue to itself more and more centralised power and control over Europe’s citizenry, businesses, societies and economies. As Brussels has consolidated power over the EU economy, the performance of that economy has been underwhelming, particularly since the self-inflicted energy crunch caused by the 16 rounds of sanctions the EU has (so far) imposed on Russia. Which brings us to the next point…
4. The EU Needs Your Money…
…to fund its remilitarisation. And taxpayer funds and further expansions of public debt alone will not be enough to finance its ambitions. Indeed, the EU’s plan to borrow €800 billion for defence was rejected by the Dutch Parliament. Just a few days ago, the European Commission announced the launch of yet another union, the “Savings and Investment Union”, aimed at channelling trillions of euros of European savings into the coffers of a new generation of innovative European companies — primarily, of course, in the arms business. From Euronews:
The European Commission unveiled on Monday a plan to better channel up to €10 trillion in bank deposits across the bloc into much-needed strategic investments.
“Currently, too few European citizens make a decent return on their hard-earned savings, at least not in a simple and cost-efficient way,” EU Commissioner for Financial Services Maria Luis Albuquerque told reporters in Brussels. “This is regrettable and represents a loss to us all,” she added.
In other times of widespread war, European and North American governments have been able to raise funds by selling war bonds to the citizenry. But that has tended to work only when the government of the day and its war effort enjoy a minimal level of popularity. That is unlikely to be the case with the EU’s attempts to keep project Ukraine alive. So, instead, Brussels is seeking to rewrite its own regulations, primarily aimed at protecting investors, in order to make it easier for investment funds to invest in arms manufacturers, including in securitised assets.
This plan appears to have been in the pipeline for some time. Just over a year ago, France’s Minister for the Economy Bruno Le Maire declared that Europe does not have sufficient funds and needs to “mobilize all of Europeans’ savings – 35 trillion euros – to finance the climate transition, fund our defence efforts, and invest in artificial intelligence.”
The fact that an increasingly militarised EU is openly coveting its citizens vast savings pool and is willing to significantly water down investment protections in order to get it should also set off alarm bells wrt its digital euro plans. If the ECB and EU Commission are able to successfully launch a digital euro (still a big “IF” since no G20 central bank has managed to pull it off), they will have far greater control over our funds. And to gain easier access to those funds, all they would need to do is rewrite the rules.
5. The Digital Euro Will Go Hand in Hand With the Digital Identity Wallet.
Most EU citizens are probably blissfully unaware that the EU launched its digital identity legislation last year, and that by 2026 all be required to offer at least one EU Digital Identity Wallet to all citizens, residents, and businesses. As the FT reported back in 2021, CBDCs will almost certainly have to go hand in hand with digital IDs:
“What CBDC research and experimentation appears to be showing is that it will be nigh on impossible to issue such currencies outside of a comprehensive national digital ID management system. Meaning: CBDCs will likely be tied to personal accounts that include personal data, credit history and other forms of relevant information.”
Combining digital currencies with digital IDs while phasing out, or even banning, the use of cash would grant governments and central banks the ability not only to track every purchase we make but also to determine what we can and cannot spend our money on. They could also be used to strongly encourage “desirable” social and political behaviour while penalizing those who do not toe the line. Imagine that power in the hands of Eurocrats like Von der Leyen!
The positive news is that the future success of the ECB’s digital euro depends primarily on the citizenry. As happened in Nigeria, we will have the choice as to whether to accept it or not, as notes the German independent media outlet Multipolar:
[W]hen the exclusive characteristics of cash and the consequences of its replacement come into public awareness, citizens can make a conscious decision at the checkout whether to pay digitally and thus work towards the disappearance of cash, or whether to use notes and coins and thus contribute to future generations being able to take advantage of the properties of cash.
Those properties include “the freedom to hold taxed income in one’s own hands,… anonymity when paying, the ability to transact in the event of technical failures, and better control over one’s own spending, promotion of a disciplined approach to money even for children, inclusion of people with visual impairments, Down’s syndrome and other disabilities, the possibility of earning money independently without first opening a bank account, and escape from the fees of the financial industry.”
[1] It is hardly surprising that the ECB is using this argument as its prime justification for accelerating the launch of the digital euro. For a start, anti-Trump feeling is strong both among EU politicians and the broader European public right now. Also, the argument is nothing new. In fact, the most commonly cited justification for launching CBDCs going all the way back to 2019 is as a means of countering the risks posed by so-called “stablecoins” like Meta’s proposed Libra coin.
[2] This 3,000 euro holding limit is considered low enough to mitigate the risk of deposit flight from commercial bank deposits to the CBDC accounts leading to a dangerous outflow of capital from the commercial banking system, resulting ultimately in bank runs and collapses. The last thing the world’s central banks want to do is disintermediate large private banks, whose interests they tend to serve above all else.
In fact, central banks have been working hand-in-glove with many TBTF lenders (JP Morgan Chase, Goldman Sachs, HSBC, BNP Paribas, BBVA…) to set up and road test the CBDC infrastructure. If any financial institutions are going to be “disintermediated”, it will probably be small, local banks and credit unions, which will not be able to cope with the added layers of regulatory costs, burdens and complexities.
According to a December 2023 report commissioned by the European Banking Association, a holding limit at 3,000 euro could realistically lead to an outflow of up to 739 billion euro of bank deposits in the euro area — equivalent to a loss of 10% of the total household deposit base and 3% of the total bank liabilities. And it is smaller banks that will feel the most pain:
Such deposit runs might especially hit smaller banks for two reasons. First, customers in smaller banks tend to have lower levels of deposits. Hence the holding limit will bind fewer customers, leading to a larger share of deposits being withdrawn from smaller banks than larger banks. Second, deposit funding typically makes up for a larger share of the funding for smaller banks.
Irrelevance Breeds Defiance in Europe
March 26, 2025
Source: Pressenza
Image from Pixabay
A few weeks ago, I paraphrased Marx’s words from nearly two centuries ago: “A spectre is haunting Europe – the spectre of irrelevance”. Recent events suggest that the spectre is rapidly becoming a reality. While the European Union and Britain are in overdrive, expressing unconditional support for the Ukrainian government and pushing it to continue fighting, the Ukraine crisis is no longer central for the dialogue between Russia and the United States. It has become just one of many issues – and possibly not the most important one – in the growing strategic discussion between Moscow and Washington, a discussion that excludes Europe.
Europeans naturally resent their exclusion from negotiations. Many attribute this exclusion to the drastic policy shift undertaken by President Trump and his team. J.D. Vance’s critical speech at the Munich Security Conference with its emphasis on values and democracy highlighted the conflict between the globalist ruling circles of the EU and the newly nationalist American administration. He overtly supported Europe’s nationalists and deplored their ostracization, specifically mentioning Germany and Romania.
However, the American attitude toward the European Union is not new, in fact, it shows a degree of continuity. It was a senior official of the Obama administration, Victoria Nuland, who laconically expressed this stance in 2014. In a telephone conversation with the U.S. Ambassador in Kiev she tersely dismissed European concerns raised by the ambassador: “Fuck the EU”. If anything, Trump officials have been more gracious and diplomatic.
This continuity reflects Europe’s chronic dependence on the United States. The crisis in Ukraine was triggered by the Maidan events, fomented with the active participation of the same Ms. Nuland, who testified that the U.S. had spent $5 billion on reorienting the Ukrainian ruling class away from Russia and political neutrality toward NATO and a Euro-Atlantic future. Europe went along with American policies, and European media followed suit by demonising Russia and its president. Russians have been excluded from most international sports events, film festivals and scientific conferences. Hardly anything positive has been published about Russia in mainstream media in recent years. “Rusophrenia” – a belief that Russia is about to collapse and to take over the world — has been stoked on both sides of the Atlantic. This irrational view of Russia is now entrenched in Western public opinion, even in countries like France, which traditionally maintained close cultural, economic and political ties with that country.
European foreign policy has largely degenerated into sabre-rattling. A prime example is Estonian Kaja Kallas, who, despite her position as the EU’s chief diplomat, rejects diplomatic approach with respect to Russia. President Macron, in an eloquent address to the nation, offered to extend nuclear deterrence to other European countries, with Poland and the Baltic republics gratefully accepting it. More recently, he presented a “survival manual” to his compatriots, instructing them on the supplies they must keep at home to survive a war. Ursula von der Leyen promised to rearm Europe, to raise 800 billion euros for this purpose and to revive Europe’s stagnating economy through military Keynesianism.
Since the newly elected Bundestag members, would have refused to adopt it, the outgoing parliament voted on an amendment to the constitution, lifting the government’s limitation to borrow money for the military. This disregards the democratic will of the citizens but benefits Rheinmetall, Germany’s main arms manufacturer. Alarm bells are ringing over austerity measures and further cuts to social services across Europe, not just in Germany. U.K. Prime Minister Starmer, arguably the most enthusiastic cheerleader of Europe’s war party, announced an overhaul of the welfare system, cutting benefits to the disabled and pushing many into poverty. All of this does not bode well for liberal ruling circles, as Europeans grow increasingly frustrated with political manipulations that render their democratic choice meaningless and relegate their concerns to the back burner.
Europe’s apparent preparations for war are based on the belief that Russia is bent on conquest – first all of Ukraine, then the rest of Europe. Any mention of the fact that Russian government has never expressed such intentions is simply dismissed as “Kremlin’s disinformation”.
This belief feeds into a long-standing European phobia, portraying Russia as a menacing Other. This ideology took a most aggressive and genocidal form as anti-Russian racism, which fueled the extermination war that soldiers from a dozen European nations, under German auspices, waged against the Soviet Union from 1941 to 1945. The rehabilitation and celebration of Nazi collaborators in that war have become mainstream in Eastern Europe, including Ukraine, and this view is spreading elsewhere with the growing influence of East Europeans in Brussels.
Instead of a realistic assessment of the evolving international context, fiery rhetoric and self-righteous posturing drive European policy, with no exit ramp in sight. The oft-repeated idea of dispatching European soldiers to Ukraine is a non-starter — not only for Russia but also for Europe itself, which lacks both the will and the power to confront Russian forces. All talk of a “coalition of the willing” – an ominous term given the West’s debacle in Iraq – is contingent on an American “backstop”, which the U.S. has refused to provide.
Europe seems determined to undermine the current Ukraine peace process by encouraging Kiev’s intransigence and formulating unrealistic demands that ignore military and political realities. Veteran political analyst, Anatol Lieven has called this European attitude “malignantly stupid” and characterised Europe’s military preparations as “a costume play,” in which Macron plays Napoleon and Starmer plays Winston Churchill. Curiously, in the Oval Office last February, Zelensky, answering in English a question about his wardrobe, misused the word “costume,” which means “suit” in his native Russian.
Trump has significantly shifted the country’s foreign policy despite the dominant anti-Russian sentiment in the U.S., which the previous governments and loyal to them media actively fomented. So far, European politicians continue to double down on their denunciations of Russia, albeit wisely refraining from antagonising Washington — a risky move at best. They continue to nurture Zelensky’s hope of joining NATO, even though Trump and his team have repeatedly rejected the idea. Europe has become a prisoner of its own rhetoric, which appears increasingly delusional.
Growing progressively estranged from where the real action is, it is becoming merely the western periphery of Eurasia.
Ironically, there is hope for Europe — not only in the growing ire of European electorates, who may vote current liberal politicians out of office, but also in European leaders’ habit of following Washington. Gradually, they may abandon their ideological narratives and come around to the American position, even as they resent it. It may act like a defiant teenager, which Prince William recently demonstrated posing in a British tank a hundred miles from the Russian border. However, its nickname “the Old World” suggests that Europe may return to its senses, especially in view of its economic and demographic decline. Otherwise, Europe may start another world war – this time the last one.
Yakov M. RabkinWebsite
Yakov M. Rabkin is Professor Emeritus of History at the Université of Montréal. His publications include over 300 articles and several books, including Science between Superpowers, A Threat from Within: A Century of Jewish Opposition to Zionism, What is Modern Israel?, Demodernization: A Future in the Past, and Judaïsme, islam et modernités. He has performed consulting work for, among others, the OECD, NATO, UNESCO, and the World Bank.
Image from Pixabay
A few weeks ago, I paraphrased Marx’s words from nearly two centuries ago: “A spectre is haunting Europe – the spectre of irrelevance”. Recent events suggest that the spectre is rapidly becoming a reality. While the European Union and Britain are in overdrive, expressing unconditional support for the Ukrainian government and pushing it to continue fighting, the Ukraine crisis is no longer central for the dialogue between Russia and the United States. It has become just one of many issues – and possibly not the most important one – in the growing strategic discussion between Moscow and Washington, a discussion that excludes Europe.
Europeans naturally resent their exclusion from negotiations. Many attribute this exclusion to the drastic policy shift undertaken by President Trump and his team. J.D. Vance’s critical speech at the Munich Security Conference with its emphasis on values and democracy highlighted the conflict between the globalist ruling circles of the EU and the newly nationalist American administration. He overtly supported Europe’s nationalists and deplored their ostracization, specifically mentioning Germany and Romania.
However, the American attitude toward the European Union is not new, in fact, it shows a degree of continuity. It was a senior official of the Obama administration, Victoria Nuland, who laconically expressed this stance in 2014. In a telephone conversation with the U.S. Ambassador in Kiev she tersely dismissed European concerns raised by the ambassador: “Fuck the EU”. If anything, Trump officials have been more gracious and diplomatic.
This continuity reflects Europe’s chronic dependence on the United States. The crisis in Ukraine was triggered by the Maidan events, fomented with the active participation of the same Ms. Nuland, who testified that the U.S. had spent $5 billion on reorienting the Ukrainian ruling class away from Russia and political neutrality toward NATO and a Euro-Atlantic future. Europe went along with American policies, and European media followed suit by demonising Russia and its president. Russians have been excluded from most international sports events, film festivals and scientific conferences. Hardly anything positive has been published about Russia in mainstream media in recent years. “Rusophrenia” – a belief that Russia is about to collapse and to take over the world — has been stoked on both sides of the Atlantic. This irrational view of Russia is now entrenched in Western public opinion, even in countries like France, which traditionally maintained close cultural, economic and political ties with that country.
European foreign policy has largely degenerated into sabre-rattling. A prime example is Estonian Kaja Kallas, who, despite her position as the EU’s chief diplomat, rejects diplomatic approach with respect to Russia. President Macron, in an eloquent address to the nation, offered to extend nuclear deterrence to other European countries, with Poland and the Baltic republics gratefully accepting it. More recently, he presented a “survival manual” to his compatriots, instructing them on the supplies they must keep at home to survive a war. Ursula von der Leyen promised to rearm Europe, to raise 800 billion euros for this purpose and to revive Europe’s stagnating economy through military Keynesianism.
Since the newly elected Bundestag members, would have refused to adopt it, the outgoing parliament voted on an amendment to the constitution, lifting the government’s limitation to borrow money for the military. This disregards the democratic will of the citizens but benefits Rheinmetall, Germany’s main arms manufacturer. Alarm bells are ringing over austerity measures and further cuts to social services across Europe, not just in Germany. U.K. Prime Minister Starmer, arguably the most enthusiastic cheerleader of Europe’s war party, announced an overhaul of the welfare system, cutting benefits to the disabled and pushing many into poverty. All of this does not bode well for liberal ruling circles, as Europeans grow increasingly frustrated with political manipulations that render their democratic choice meaningless and relegate their concerns to the back burner.
Europe’s apparent preparations for war are based on the belief that Russia is bent on conquest – first all of Ukraine, then the rest of Europe. Any mention of the fact that Russian government has never expressed such intentions is simply dismissed as “Kremlin’s disinformation”.
This belief feeds into a long-standing European phobia, portraying Russia as a menacing Other. This ideology took a most aggressive and genocidal form as anti-Russian racism, which fueled the extermination war that soldiers from a dozen European nations, under German auspices, waged against the Soviet Union from 1941 to 1945. The rehabilitation and celebration of Nazi collaborators in that war have become mainstream in Eastern Europe, including Ukraine, and this view is spreading elsewhere with the growing influence of East Europeans in Brussels.
Instead of a realistic assessment of the evolving international context, fiery rhetoric and self-righteous posturing drive European policy, with no exit ramp in sight. The oft-repeated idea of dispatching European soldiers to Ukraine is a non-starter — not only for Russia but also for Europe itself, which lacks both the will and the power to confront Russian forces. All talk of a “coalition of the willing” – an ominous term given the West’s debacle in Iraq – is contingent on an American “backstop”, which the U.S. has refused to provide.
Europe seems determined to undermine the current Ukraine peace process by encouraging Kiev’s intransigence and formulating unrealistic demands that ignore military and political realities. Veteran political analyst, Anatol Lieven has called this European attitude “malignantly stupid” and characterised Europe’s military preparations as “a costume play,” in which Macron plays Napoleon and Starmer plays Winston Churchill. Curiously, in the Oval Office last February, Zelensky, answering in English a question about his wardrobe, misused the word “costume,” which means “suit” in his native Russian.
Trump has significantly shifted the country’s foreign policy despite the dominant anti-Russian sentiment in the U.S., which the previous governments and loyal to them media actively fomented. So far, European politicians continue to double down on their denunciations of Russia, albeit wisely refraining from antagonising Washington — a risky move at best. They continue to nurture Zelensky’s hope of joining NATO, even though Trump and his team have repeatedly rejected the idea. Europe has become a prisoner of its own rhetoric, which appears increasingly delusional.
Growing progressively estranged from where the real action is, it is becoming merely the western periphery of Eurasia.
Ironically, there is hope for Europe — not only in the growing ire of European electorates, who may vote current liberal politicians out of office, but also in European leaders’ habit of following Washington. Gradually, they may abandon their ideological narratives and come around to the American position, even as they resent it. It may act like a defiant teenager, which Prince William recently demonstrated posing in a British tank a hundred miles from the Russian border. However, its nickname “the Old World” suggests that Europe may return to its senses, especially in view of its economic and demographic decline. Otherwise, Europe may start another world war – this time the last one.
Yakov M. RabkinWebsite
Yakov M. Rabkin is Professor Emeritus of History at the Université of Montréal. His publications include over 300 articles and several books, including Science between Superpowers, A Threat from Within: A Century of Jewish Opposition to Zionism, What is Modern Israel?, Demodernization: A Future in the Past, and Judaïsme, islam et modernités. He has performed consulting work for, among others, the OECD, NATO, UNESCO, and the World Bank.
A shot of the beginning of the March 8, 2025 march in Santiago de Chile. Photo © Nicole Kramm.
A young woman with a red hand painted on her chest during the March 8, 2025 march in Santiago de Chile. Photo © Nicole Kramm.
