The Digital Euro is Here (2)

'To protect the financial system, there would be a cap on how many digital euros any individual could hold.' ∽ the EU Parliament’s Press Release, 23 June 2026

Yesterday, we talked about the digital euro, which will become a problem before too long:

The Digital Euro is Here (1)

So, let’s talk about that a bit more, shall we?

Whenever you encounter originally non-English content, it comes to you in my translation, with emphases and [snark] added.

From the EU Parliament’s Press Release

The quoted text below is from the press release of the EU Parliament on the occasion of the adoption of the ‘digital currency package’ on 23 June 2026:

On Tuesday, the Economic and Monetary Affairs Committee adopted its position on the single currency package, consisting of three files. The one on the establishment of the digital euro was adopted by 43 votes to 14, with 1 abstention.

The digital euro would be a new, electronic form of money issued by the European Central Bank (ECB) and would work online and offline. Online payments would be processed through an account-based system, while offline payments would work directly via local storage devices. The offline functionality would be equivalent to using physical cash, as losing the device would mean losing the offline money with no refund possible [don’t be fooled, for the transactions data is surely transmitted once you go online]

Privacy

Privacy-by-design and privacy-by-default principles would be built into the digital euro. Cutting-edge technologies, such as “zero-knowledge proofs”, would allow transactions to be verified without exposing personal data, which would be processed only to the extent strictly necessary for the system to function [the word ‘would’ is three times found in this sentence]. The ECB would not have access to personal identification data [I doubt that, for the transactions are all routed through … the ECB that must connect the digital wallet (account) with your bank account].

Distribution model

All payment service providers (PSPs), including banks, e-money providers, post offices, and regulated crypto-asset providers, could distribute the digital euro across the EU [hi there, money laundering]. Most businesses would be required to accept it. Exceptions would apply to the self-employed, and small and micro enterprises that do not accept other digital payments.

Temporary refusals, such as during a power outage, would also be allowed under specific conditions. Visitors, tourists and, in some cases, people living outside the euro area would also be able to use it [case in point: Montenegro has unofficially adopted the euro but is neither a member of the EU or of the Eurozone; I’d think some in the Nordics (Norway, Denmark, Sweden) might also (ab)use such wallets to launder money or take advantage of shitty exchange rates (here’s looking at you, Norway)].

Fees and charges

Basic services, such as opening an account, holding and managing funds, and getting at least one payment instrument, would be free of charge. PSPs could charge for extra services, with the exception of account maintenance inactivity penalties or service bundling [‘I’m sorry Dave, I cannot do this’]. Fees for merchant and inter-provider would be capped, while offline payments would be entirely fee-free.

Financial stability and holding limits

To protect the financial system, there would be a cap on how many digital euros any individual could hold [strangely, while it is claimed that the digital euro is ‘just like cash’, no such limits apply in the entirely-offline world: make it make sense]. MEPs proposed the EU ceiling should be set by the Commission, based on ECB recommendations, and reviewed at least every two years. MEPs want the Parliament to have full decision-making powers in this process [good luck with that].

Businesses would not be allowed to hold digital euros, except to accumulate incoming payments for up to 24 hours. Crucially, the digital euro would not earn or cost any interest [if that’s true, it could be quite … revolutionary].

Seamless launch and the ECB’s role

MEPs want to ensure that the ECB’s role would be kept separate from its monetary policy functions [one more ‘would’, but here’s the crucial thing: the ECB will use the various Eurosystem banks to issue the digital euro while keeping both oversight and monetary policy under their roof, making the ECB much more like the US Federal Reserve System]. Before the launch, the ECB should finalise a rulebook, build the infrastructure, run real-life pilot tests, and iron out liability rules with particular attention to offline risks, like double-spending. Once authorised, a roll-out period of at least 24 months would follow, giving banks, providers, and users time to prepare. Governments and providers would also run awareness campaigns.

The single currency package

A second file on the provision of digital euro services by payment services providers incorporated in member states whose currency is not the euro, adopted by 43 votes to 9, with 6 abstentions, would allow banks and PSPs from non-euro EU countries to distribute the digital euro, subject to the same rules, while the ECB would retain the power to restrict access and use. Non-euro EU member states would also need to appoint a national authority to monitor any impact on their own currency [I suggest that this will not end well for the non-euro EU member-states whose citizens may use the digital euro to take advantage of exchange rate discrepancies and the relatively higher purchasing power of the (digital) euro].

A third file, on legal tender of euro banknotes and coins, adopted by 46 votes to 4, with 8 abstentions, would oblige euro area countries to keep cash accessible and plan for digital payment disruptions [we’ll talk about this in detail below]. Businesses would not be allowed to ban cash through “no cash” signs or standard contract terms [how TF was this o.k. during the Covid shitshow (and by ‘o.k.’ I mean legal)?]. Member states would also need to check cash availability regularly, with special attention to vulnerable groups, such as the elderly, low-income individuals, and the unbanked [of course, there are ‘vulnerable’ groups here, too].

The Digital Euro’s Third Rail: Legal Tender Rules

And this third proposal, which received virtually no coverage over all the ruckus concerning ‘the digital euro’, is perhaps even more relevant than the part that envisions a ban on interest.

Entitled technically 2023/0208(COD), ‘Legal tender of euro banknotes and coins’ (full procedure), here are some choice quotes from the associated English-language file (source). The forthcoming regulation is

based on Article 133 TFEU [link to content], which provides for the adoption of measures, including monetary law measures, which are necessary for the use of the euro as the single currency.

As per the above-linked website, said Art. 133 TFEU (I find this acronym funny, by the way), reads as follows:

Without prejudice to the powers of the European Central Bank, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall lay down the measures necessary for the use of the euro as the single currency. Such measures shall be adopted after consultation of the European Central Bank.

Note the highlighted part: there’s no explicit mentioning of the EU Commission, but their hand is implied in the ‘ordinary legislative procedure’—which always begins with (drum roll) an initiative™ by the EU Commission:

The main characteristic of the ordinary legislative procedure is the adoption of legislation jointly and on an equal footing by Parliament and the Council. It starts with a legislative proposal from the Commission (normally for a regulation, directive or decision) and consists of up to three readings, with the possibility for the co-legislators to agree on a joint text - and thereby conclude the procedure - at any reading.

And now back to the digital euro 2023/0208(COD) paper:

Interaction between euro banknotes and coins and the digital euro (Article 15)

Article 15 requires the convertibility of cash and the digital euro into each other at par, and for the avoidance of doubt gives the payer the right to choose to pay in cash or digital euro where mandatory acceptance of both applies in accordance with this Regulation, including notably those provisions affecting mandatory acceptance (i.e. articles 4, 5, 6 and 7), as well as with the digital euro Regulation.

Now, isn’t it funny to consider Gresham’s Law:

Gresham’s law is a monetary principle stating that ‘bad money drives out good’. For example, if there are two coins in circulation containing metal of different value, which are accepted by law as having similar face value, the more valuable coin based on the inherent value of its component metals will gradually disappear from circulation.^[1][2]

As if we needed another such experience, the EU is currently preparing the roll-out of the digital euro on par with the analogue euro (cash), which is as close to a natural experiment as to how these things work in reality.

I suspect we’ll learn before too long if Euro cash is a better currency than its digital version (or vice versa).

Bottom Lines

Here’s a bunch of quote-able materials from the top-linked press release:

Rapporteur Fernando Navarrete Rojas (EPP, ES) said: “With the single currency package, we are protecting citizens’ freedom to choose how they pay [funny that, under legal tender rules, citizens may not choose to pay their taxes in other currencies, such as yuan, dollars, or rubles, but I digress (it is possible to pay one’s taxes in Switzerland using US$, by the way)]. We are strengthening access to and acceptance of cash, while making central bank money available in digital form. The digital euro will complement cash, never replace it [I suppose this categorical statement will not age very well]. No one should be forced away from cash, and no one should be left without a secure, resilient and genuinely European digital payment option.

“Europe does not have to choose between the digital euro and successful private payment solutions. We need both to work together [a public-private partnership, i.e., corporatism = fascism]. The agreement rightly recognises the dual approach: existing standards and infrastructure should be reused wherever possible. This will allow European payment solutions to connect to a common acceptance infrastructure and become interoperable across borders.

“The agreement also ensures that privacy will be built into the digital euro from the outset. Europeans will gain a secure digital payment option while remaining in control of both their money and their personal data.”

At this point, let’s just note a few more items and be done with this:

First up, in yesterday’s piece, I mentioned Russia! Russia! Russia! as the implementation area of the only technically comparable payment system that avoids both SWIFT and the issuers of cards (Mastercard, Visa); Wikipedia:

Mir (Russian: Мир, IPA: [ˈmʲir]; lit. ‘the world’ or ‘peace’) is a Russian card payment system for electronic fund transfers established by the Central Bank of Russia under a law adopted on 1 May 2017.^[1] It is operated by the Russian National Card Payment System, a wholly owned subsidiary of the Central Bank of Russia.^[2] Mir does not itself issue cards, extend credit or set rates and fees for consumers; rather, Mir provides financial institutions with Mir-branded payment products that they use to offer credit, debit, or other programs to their customers [note the compartmentalisation: Mir is a subsidiary of the central bank, with the latter being the issuer of the currency].

The development and implementation of Mir was spurred by the imposition of international sanctions against Russia in 2014^[3] to circumnavigate the reliance on the likes of Visa and Mastercard, which were blocked in Russia at the time. Mir created its own Mir Pay wallet for contactless payments.

And this is where my scepticism comes in: if anti-Russian sanctions compelled the Russian gov’t to develop and alternative to Visa and Mastercard (plus SWIFT) due to them being in foreign, or ‘enemy’, hands, what would that render the digital euro’s stated aim of doing … well, just that?

Second, as long-term digital sceptic Norbert Häring recently wrote (archived, 27 June 2026), there’s a clear duplicity built into the digital euro architecture, specifically related to the behind-closed-doors centralisation push spearheaded by the ECB:

The Bank for International Settlements (BIS), a leading institution of central banks, stated in 2023 that digital central bank money, such as the planned digital euro, is helpful and necessary for establishing a largely automated system of programmed payments stored on the blockchain. In principle, this is possible without central bank money. However, according to the BIS, freely circulating central bank money is necessary to ensure users have sufficient confidence that they will actually receive their money. This is because, unlike private bank money, which is at risk of bankruptcy, central bank money enjoys an unlimited government guarantee. Only a currency reform can invalidate this guarantee.

The fact that the digital euro itself is not intended to be programmable is not an obstacle. Services based on programmable payments in digital euros are explicitly encouraged and should be promoted.

Third, let’s not mince words here—have you ever heard about the term Scheidemünze before? If not, please let me take you down a particular rabbit-hole, relevant well beyond coin collectors, here. This is from the English Wikipedia piece:

Scheidemünzen (singular – Scheidemünze) were representative coins or token coins issued alongside Kurantgeld or currency money in Austria and Germany up to start of the First World War in August 1914 whose intrinsic metal value was less than the legal value stamped on them. Like Notgeld (”emergency money”) they were a kind of credit money or fiat money. The term Scheidemünze (”division money”) referred to the “division into hellers and pfennigs during the purchase process” (”Scheiden auf Heller und Pfennig beim Kaufvorgang”). It thus applied to the low- to medium-value coins and is often translated as small change coin, small-coin change or just small coin. Since 1915, all coins minted in Germany, including the current euro coins have been Scheidemünzen or fiat money as opposed to currency or commodity money whose nominal value is fully covered by its intrinsic value.

The German-language entry is way, way, way more extensive, and perhaps we’ll do a deep dive into the nooks and crannies of these things before too long; for now, I’ll offer you a glimpse into what central banks in the Eurozone can legally do with under the above-related conditions of ‘tokenisation’, in place since 1915.

The below references are all to the Austrian Scheidemünzen Act of 1988 in its currently valid version (adopted 9 June 2005); I’ll use that legislation as I’m a bit more familiar with it, but note that under EU rules, if stuff is legal in one member-state, it cannot be illegal in other member-states:

• as per § 8 (1.1), all Euro coins are Scheidemünzen and may be issued by the Austrian Mint (Münze Österreich) or any relevant third party (of the Eurosystem)

• § 8 (4) obliges the Austrian Mint to redeem all Scheidemünzen in banknotes (provided the former aren’t declared invalid before)

• § 8 (5) obliges the Austrian Nat’l Bank to redeem all Scheidemünzen on their face value and bring them into circulation

There’s of course much more in this Act, but there’s also a kind-of way out of the massive problems accumulating since the introduction of the Euro (as unit of account per 1 Jan. 1999), namely the ECB’s inflation target of 2% per year.

It’s been 27 years now since then, and if we’re handing out the benefit of the doubt to official such numbers (targets), 2% growth/year is equal to a doubling time of 35 years; that means, under the 2% growth/year of the money supply, the amount of currency in circulation plus the massive amounts of ‘quantitative easing’ since … well, at least 2007/08, I submit that official inflation numbers are mostly PHEIC and we’re looking at considerable losses of purchasing power across the board (just buy groceries and weep).

Is there a way out?

Funny that you may ask, yes: the very same Scheidemünzen Act also envisions the issuance of ‘hard’ money, i.e., specie coins made of gold and/or silver:

§ 12 is on ‘collectors’ coins’, or Sammlermünzen, with (1.3) noting the following:

Gold coins denominated in euros or cents, with a fine weight of one troy ounce or a fraction of one troy ounce and a gold alloy ratio of 999%, which are put into circulation at the respective daily value for bullion gold (London Gold Fixing, converted at the mid-market exchange rate for the US dollar) plus a minting fee.

§ 12 (4) also notes:

The Austrian Mint is entitled to bring collector coins into circulation in accordance with paragraph 1 [that’s the preceding quote].

So, there you have it. The solution™ to whatever problem™ likely to be caused by the digital euro is already there.

Why, oh why, am I thinking of Hegel right now?

As to the next steps of the EU, one last quote from the press release:

The negotiating mandates for the three texts will be announced at the start of the July plenary session. The final legislation will have to be negotiated with the Council before coming into force.

Stay tuned. It’ll be a wild ride.