The Hidden Risks of the Digital Euro

Foundation for Economic Education ^ | Thursday, October 9, 2025 | Cláudia Ascensão Nunes

[E. Pluribus Unum]

The EU’s plan to watch what you spend.

and modernization. But, much like the Chinese model that seems to inspire ECB President Christine Lagarde, what is at stake is not just technology: it is the risk of turning a payment instrument into a mechanism of control over every citizen’s transactions. Across the Atlantic, the United States took the opposite path: it legalized stablecoins and banned a centralized digital dollar, strengthening freedom and competition instead of state control.

On September 26, the European Central Bank announced what had long been anticipated: it will conduct new experiments on what can be achieved with the digital euro.

This project, presented as an achievement of financial autonomy, has now been accelerated after the United States Congress approved the so-called GENIUS (“Guiding and Establishing National Innovation for U.S. Stablecoins”) Act, which authorizes stablecoins currencies pegged to stable assets, usually the dollar. At the same time, Congress also approved a prohibition on the Federal Reserve from creating an official digital dollar, ensuring that innovation remains decentralized and outside the direct control of the State.

In Brussels, the reaction was the opposite. The fear that these dollar-linked digital currencies could trigger a “digital dollarization” of the European economy served as justification to accelerate the digital euro. But instead of strengthening the diversity of existing solutions, the European Union is moving forward with a project directly controlled by the ECB. The narrative is one of “financial sovereignty,” but in practice it risks increasing citizens’ dependence on central power and undermines competition in the financial sector, especially when the Chinese model appears to serve as reference.

The ECB insists that the digital euro will be just another payment option, coexisting with cash. But President Lagarde has repeatedly praised the Chinese model, which...

[Olog-hai]

… (M)uch like the Chinese model that seems to inspire ECB President Christine Lagarde, what is at stake is not just technology: it is the risk of turning a payment instrument into a mechanism of control over every citizen’s transactions. …

Now what does that sound like?

And he causeth all, And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads: / And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.

— Revelation 13:16-17

[sauropod]

Bkmk

[ScaniaBoy]

...turning a payment instrument into a mechanism of control over every citizen’s transactions...

This is of course par for the course for the EU.

However, in 1997 I, together with my mother, wrote a chapter on the competition between digital free currencies and state run currencies in a book she wrote on the common euro currency. (The € came into existence first in January 1999.)

Lots have happened since then, and not all of our predictions have turned out to be true (as yet I should add). However, we did compare EU:s vision of its tariff (yes!!) and regualtory protected single currency area to what Napoleon tried to do with his Continental System, and wrote:

The gendarmes of the first decade of the 19th century were powerless against carrier pigeons and small fast boats who transported information and goods. Is there any reason to expect it to be easier to stop the exchange of digital information over a world encompassing computer network?

Yes, these days not only the Chinese have taken (some) power over the digital world, but remember when the financial incentive to break this power will grow (as it will) technological inventions will IMHO break the power grab of the EU bureaucrats and others.

[yefragetuwrabrumuy]

Internationalists have been cranking out such bad ideas for decades, but none of them have been able to overcome, much less supplant “The Iron Rules of Economics”.

The king of these rules is “Gresham’s Law”, simply put: “Bad money pushes out good money”. When there are two competing currencies, everyone wants to save the good one and spend the bad one.

This drives down the value of the bad one and drives up the value of the good one, until they no longer compete.

If the government tries to eliminate the good currency, it just creates *more* currencies, anything in abundance that is desired and can be traded.

[delta7]

The U.S. is only one vote away itself. As written, a CBDC CAN be instated if our Congress votes for one.

[delta7]

From AI:

“Congress can vote to instate a Central Bank Digital Currency (CBDC), but it would require explicit legislative approval. Recent bills, such as the Anti-CBDC Surveillance State Act, aim to prohibit the Federal Reserve from issuing a CBDC without Congressional authorization”