EU/ECB Coup Imminent

Amid the 'chaos' this late June, the European Commission released further particulars about the war on cash/introduction of a 'digital euro'

Editorial preliminary: this piece originally appeared in German over at TKP.at. The below piece was furthermore slightly edited for clarity.

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Reference is also made to a report from late April 2023. Content continues below.

Announcing the EU/ECB Putsch, The Powers That Be Declare Their Readiness to Introduce a 'Digital Euro'

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Certainly, a sea change of this magnitude has attracted some attention by legacy media, but, Alas!, as has, sadly, become the norm these days, their reporting falls quite short of minimum standards of tradecraft. Neither Austrian state broadcaster ORF nor the second most-popular online outlet Der Standard (the online news portals with the widest reach in Austria alongside the Kronen Zeitung) actually provide links to the relevant documents of the EU Commission in their ‘pertinent’ articles on the digital euro.

The casual reader should therefore blindly trust the legacy media journalists (sic) that the information they provide without evidence or citations is, actually, correct. This is, I would argue, a questionable hypothesis in and of itself, but in this particular case, it is a highly dubious matter due to the omission of essential further information.

What did the EU Commission do?

Two days ago (28 June 2023), the EU Commission not ‘only’ submitted a proposal dealing with ‘digital cash’ (sic), on which legacy media did some ‘reporting’ on.

What is more, the EU Commission actually published a second proposal that deals with the ‘modernisation’ of payment transactions, about which the above-linked ORF article at least briefly refers to; however, any references in the Standard article are missing.

Picture credit. OT, but I do note that the yellow-blue design mimics the Ukrainian flag, which is certainly a coincidence, eh?

All of the following quotes are from the relevant communications from the EU Commission, with the emphasis being mine.

About the ‘Digital Euro’

First of all, it is imperative to differentiate what these two legislative proposals by the EU Commission deal with: the first proposal, entitled ‘Single Currency Package’ deals with ‘euro cash as legal tender’ while the second proposal, bearing the title ‘Modernising payment services and opening financial services data’ seeks to create the legal framework for a possible digital euro as a supplement to euro banknotes and coins.

Legal tender of euro banknotes and coins

Euro cash is ‘legal tender' in the euro area. This proposal aims to set out in legislation what that actually means, with a focus on two ‘A’s: acceptance and access. Although acceptance of cash is high on average across the euro area, issues have emerged in some Member States and sectors. Meanwhile, some people have difficulties in accessing cash, for example as a result of closures of ATMs and bank branches.

That sounds reasonable, at least upon a quick reading, notwithstanding the actual practical application of ‘legal tender’ notes and coins, that is, a form of exchange for, in US parlance, ‘all debts private and public’. Here in Europe, this is apparently not what the EU Commission wants you to see. Note, moreover, that ‘difficulties in accessing cash’ have emerged primarily through corporate decisions (closures of bank-serviced ATMs, which are cheaper for consumers than those cash machines in, say, grocery stores); whether further regulations or similar can (should) change this is therefore an open question.

The above-quoted passage is from the EU Commission’s press release. The following passages are from the proposed law, with my emphases added. See if you can spot the difference to the press release:

The concept of legal tender as interpreted by the Court of Justice for euro banknotes implies: (i) mandatory acceptance, (ii) at full face value and (iii) with the effect of discharging payment obligations…

In order to preserve the effectiveness of the legal tender status of cash in practice, it is key to ensure the ease of access to euro cash, because if citizens do not have access to cash, they will not be able to pay with it and its effective legal tender status will be undermined.

Consequently, this proposal ensures that the physical form of central bank money, euro cash, remains present, available and accepted by all euro-area residents and enterprises.

That sounds ‘good’ and more realistic than the press release, but but upon closer inspection, this is emphatically not what this proposal is actually about (the below is excerpted from the ‘Definitions of Legal Tender’ section on pp. 7-8; emphases mine).

The proposal sets out, for the first time in secondary legislation, a definition and regulation of legal tender for cash [i.e., via executive fiat]…Article 4 [of the Treaty on the Functioning of the EU] defines the legal tender of cash as entailing mandatory acceptance, at full face value, with the power to discharge from a payment obligation. A payee shall not refuse euro cash tendered in payment unless the parties have agreed on a different means of payment or an exception applies.

Article 5 sets out the conditions under which a refusal to accept euro cash would be legally possible…must be made in good faith, be based on legitimate [note that legitimate ≠ legal] grounds…Article 5 sets out two legitimate grounds on which euro cash may be refused on that basis in a non-exhaustive list, namely the tendering of banknotes the value of which is manifestly disproportionate to the value of the amount to be settled, and in exceptional cases where, at the relevant time, the enterprise has no change available or if the enterprise would not have enough change available as a result of that payment to carry out its normal transactions.

Article 6 empowers the Commission to adopt additional exceptions of a monetary law nature to the principle of mandatory acceptance by means of delegated acts. These exceptions should be justified and proportionate, should not undermine the effectiveness of the legal tender status of euro cash, and should only be permitted provided that other means for the payment of monetary debts are available.

Towards Digital Money in Three Steps

‘Translated’ into plain English, these passages mean the following:

Article 4 holds that the use of cash may be refused if ‘unless the parties have agreed on a different means of payment or an exception applies’. No need to pay in physical cash if digital alternatives are available, possibly enforced by the EU Commission having declared, on the basis of executive fiat, an exception (see below, Art. 6).

Article 5 lists two ‘legitimate reasons’, clearly stating that a (cash) payment may be refused if ‘the enterprise has no change available or if the enterprise would not have enough change available as a result of that payment’. In other words: anyone may refuse to accept cash by declaring that he or she would not have enough change (cash) on hand in the future.

Article 6, in turn, ‘empowers the Commission to adopt additional exceptions of a monetary law…provided that other means for the payment of monetary debts are available’. So, the EU Commission is proposing Enabling Legislation that gives it the power to declare the ‘exceptions’ cited two paragraphs earlier.

According to the German constitutional law expert Carl Schmitt (yes, that one),

Sovereign is he who decides on the exception.

Art. 4 refers to just such exceptions, for the determination of which the EU Commission is ‘empowered’ to decide precisely those ‘exceptions...provided that other means for the payment…are available’ (Art. 6).

A company—or a tax authority like the IRS—only has to point out that a cash payment is impossible because they do not have any or ‘not enough’ change at their disposition for future (!) transactions (Art. 5) to simply create, out of nothing, ‘demand’ for ‘alternative means of payments’, by which is meant: Central Bank Digital Currency’.

On the ‘Modernisation’ of ‘Payment Services’

However, these goals must be read in the context of the Commission’s second proposal that seeks to ‘modernise’ what the EU leadership considers ‘payment services’, which was also published on 28 June 2023.

If you click on the ‘legal texts’ included in the original press release, you will learn the ‘real’ reason for this proposal (but it’s not the draft proposal but yet another press release).

‘Modernising payment services’ means little more than ‘opening financial services data: new opportunities for consumers and businesses’. Couched in legalese jargon, the EU Commission wants to set up the appropriate infrastructure and systems to ensure a permanent exchange of information between the institutions involved (my emphasis).

Here is the money paragraph from the actual draft proposal (p. 20-1; references omitted, emphasis mine):

The activity of payment institutions may span across borders and be relevant for different competent authorities as well as the EBA [European Banking Authority, the EU’s SEC equivalent], the European Central Bank (‘ECB’) and national central banks in their capacity as monetary and oversight authorities. It is therefore appropriate to provide for their effective cooperation and exchange of information. Information sharing arrangements should fully comply with the data protection rules laid down in Regulation (EU) 2016/679 of the European Parliament and of the Council and in Regulation (EU) 2018/1725 of the European Parliament and of the Council.

Akin to the proverbial ‘wolf in sheep’s clothing’, both Commission proposal work in tandem: the first one declares a CDBC—here: the ‘digital euro’ to be ‘euro cash’ while pretending to be a proposal about ‘cash as legal tender’ while the second proposal is of a more ‘technical’ nature as it seeks to establish the rules for the full digitisation of ‘financial services’ above and beyond any national legislation.

The Dirty Tricks of the Euro(klepto)crats

As is often the case, the EU Commission uses the Orwellian doublespeak to further its aims by invoking a certain word (‘cash’) and adding to its true meaning. Thus, the virtual ‘digital euro’ is declared as good as physical ‘cash’, hence it the former is declared the latter’s equivalent. A reminder from the original press release:

Today’s proposal aims to safeguard the continued and widespread acceptance of cash throughout the euro area and will also ensure that people have sufficient access to cash to be able to pay in cash if they so wish.

That is, unless the EU Commission declares an exception and forces everyone to use ‘digital cash’, which is deemed the same as physical notes and coins.

In addition to the ‘necessary’ creation of a (physical) infrastructure for the processing of digital payment transactions—which means the massive expansion of the cross-border exchange of our personal and financial transactions data—the EU Commission claims that the digital euro (my emphasis)

would be available for payments both online and offline, i.e. payments could be made from device to device without an internet connection, from a remote area or underground car park. While online transactions would offer the same level of data privacy as existing digital means of payments, offline payments would ensure a high degree of privacy and data protection for users: they would allow users to make digital payments while disclosing less personal data than they do today when making card payments, just like when paying with cash, and the same as what they disclose when they take cash out of an ATM. Nobody would be able to see what people are paying for when using the digital euro offline.

Importantly, the proposal remains mum on what happens with said transaction data as soon as you go ‘online’ again?

Then, inevitably, all transaction data is ‘updated’ and shared with third parties in other countries.

Added to this are the real costs for small and medium-sized companies in particular, because

Merchants across the euro area would be required to accept the digital euro, except very small merchants who choose not to accept digital payments (as the cost to set up new infrastructure to accept payments in digital euro would be disproportionate).

Here, I would merely point to the ongoing financial burden for healthcare providers due to electronic health records and billing operations to make a cheap and obvious point: there’s no such thing as a free lunch, and ‘digital cash’ is certainly no exception.

Added to this is the looming ‘expiration date’ of such ‘digital cash’, as expressly mentioned in the proposed Payments Directive (p. 57; my translation and emphasis):

Member States may also provide for the granting of the optional exemptions to be subject to an additional requirement of a maximum storage amount on the payment instrument or payment account of the consumer where the electronic money is stored.

In other words, ‘digital cash’ (sic) has an ‘expiration date’, which negates the option of actually saving money.

Moreover, the technical details of the implementation of a ‘digital euro’ are left outside the regulatory framework at the current time (p. 62; my emphasis):

the operation of payment systems and the provision of technical services including processing or the operating of digital wallets, which are not covered in the scope [of this draft proposal]

In other words: the EU Commission decrees this and that, regulates a large number of aspects, but leaves out ‘the provision of technical services’ associated with the introduction of ‘digital cash’ (sic).

The cross-border sharing or processing of financial data is to occur, for the time being, in an unregulated space.

Digital Cash, Technical Services, and Plot

The ‘digital euro’ is to be awarded ‘legal tender’ status through the back door in order to–and contrary to other claims—’legitimately’ introduce a CBDC.

This is linked to a massive, initially hardly regulated, area that concerns the required sharing and/or processing of financial transaction data.

Finally, it should be mentioned that the empty verbiage about ‘privacy’ in ‘offline transactions’ are little more than a smokescreen—and ultimately irrelevant—because as soon as your ‘digital wallet’ is synchronised with your bank account, all data migrates across the internal borders of the euro zone. At least.

Incidentally, existing intergovernmental agreements, such as an EU/EEA-related treaty with the US will (must) probably follow. Such FATCA treaties regarding the automated exchange of personal and financial data with US authorities are not mentioned in this context, and, so far, ‘only’ bilateral agreements with the US are in place. At this point in time, however, I consider it highly likely that a EU-US FATCA treaty will follow suit, as the relevant question from EU MP Christophe Hansen (dated 27 Oct. 2021) and the EU Commission’s response indicate.

Finally, reference must be made to the currently ongoing ‘technical talks’ between the EU and the USA, which ‘only’ made it into public arena due to a ‘leak’ regarding the to-be institutionalised exchange of personal and financial transaction data in the context of the planned introduction of digital passports.

If you haven’t done so, please check out the above piece. These secret EU-US talks are ‘continuing in June 2023’. What is particularly striking, however, is that it is precisely these ‘technical services’ that remain—for the time being—excluded from the intended regulatory measures discussed above.

Blind trust in the benevolence of a corrupt EU bureaucracy , led by Ursula von der Leyen, is by far the last option these days, given the recent past.

Stay frosty.