The Digital Euro, Like All Prospective CBDCs, Has a Serious Marketing Problem

CBDCs may be all the rage among central bankers, but as long as they offer little in the way of public benefit while posing huge risks to privacy, anonymity and other basic freedoms, they will struggle to gain traction.

A few months ago, European Central Bank (ECB) President Christine Lagarde had a rather surreal phone conversation. Under the mistaken impression she was speaking with Ukraine’s strongman President Volodymyr Zelensky when in actual fact she was talking to a notorious group of Russian pranksters, she opened up about the ECB’s plans for the digital euro, freely admitting that one of its main objectives is control and surveillance of people’s spending habits (something we have been warning about for the past year and a half). Her exact words:

“There will be control. You’re right. You’re completely right. We are considering whether for very small amounts, you know, anything that is around 300, 400 €, we could have a mechanism where there is zero control. But that could be dangerous…”

Lagarde also cited the war in Ukraine and Europe’s increasingly hostile relations with Russia as justification for a CBDC, saying: “I don’t want Europe to be dependent on an unfriendly country’s currency,” such as China’s or Russia’s. She also said the fate of a digital euro would be decided in October.

Here’s the recording in full:

ECB Leading the Way on CBDCs in the West 

October is now just three months and one day away. As Reuters reported this week, the European Commission has already published draft legislation that will give legal underpinnings for a digital euro, assuming “the ECB decides to issue one in the coming years.” That seems to be a fairly sound assumption. The German financial journalist Norbert Häring has analysed the proposed legislation in depth and concludes that the only identifiable function of the digital euro is to “help displace cash and bring Europe closer to total digital surveillance”.

Of all Western central banks (except the Reverse Bank of Australia and Sweden’s Riksbank), the ECB is furthest ahead in the race to launch a CBDC, though it is still far behind China and India, both of which are already at the pilot stage of their respective CBDCs. In a talk last week with executives of European commercial banks, the Governor of the Banque de France, François Villeroy de Galhau, described the creation of a digital euro as a “duty” for Europe’s central bankers (a word Christine Lagarde has also used in the past).

“It’s very probably our duty to issue a CBDC, but it is our will to issue it with you, commercial banks, and not against you,” he said, adding that central banks are “complementary and not competitors on money and payments.” But Villeroy de Galhau also made it crystal clear that the ECB is determined to digitise so-called “public money” in the Euro Area: “As everything becomes digital, why should central bank money be the only thing to remain on paper?”

Some commercial lenders are concerned that central bank digital currencies (CBDCs) will lead to the disintermediation of the private banking system by offering users a safer place to store their money: i.e., a central bank. But Villeroy de Galhau attempted to allay such fears, insisting that the digital euro would not replace other forms of money. In fact, money, he said, “is and will remain a public-private partnership.”

A Serious Marketing Problem

One thing that is becoming increasingly clear is that the ECB’s digital euro, like all prospective central bank digital currencies, has a serious marketing problem — not just among commercial banks worried about the threat it could pose to their business model. As the FT reported last month, there are “mounting questions among consumers, financiers and politicians over exactly what the project actually aims to achieve and whether the potential risks outweigh the benefits”:

These questions have only grown as the immediate threat from cryptocurrencies has faded along with the decline in the value of bitcoin and other rival forms of money…

Some European policymakers fear that a failure to make a clear case for the digital euro will undermine the project before it is even born — that it will come to be seen as a solution that does not quite know what problem it is solving.

“What is the compelling reason for making this reform?” This is the big unanswered question,” says Ignacio Angeloni, a former ECB official who is now a part-time professor at the European University Institute in Florence. “I don’t see any big failures in the market that require the public sector to step in and provide a digital euro.”

Getting the Narrative Right

As we recently saw in Nigeria, CBDCs may be all the rage among central bankers, but as long as they offer little in the way of public benefit while posing huge risks to privacy, anonymity and other basic freedoms, they will struggle to gain traction. Under the stewardship of Godwin Emefiele, its former governor, the Central Bank of Nigeria tried just about every ruse under the sun to expand public adoption and use of the eNaira, including removing half of all cash in circulation. But to no avail. Cash is still King in Nigeria and Emefiele is behind bars.

In Europe, central bankers are equally confident that the digital euro is just what the Euro Area’s floundering economy needs. But some politicians — who still have to care about annoying little things like public opinion, at least come election time — have serious reservations. When EU finance ministers met on June 15 to discuss the digital euro, “it was hard to muster enthusiasm for the putative CBDC,” notes a report by Coindesk. Eurogroup President Paschal Donohoe put it as delicately as he could:

“The discussion today was taking place in the context of the Commission finalising their work to bring forward a legislative proposal with regard to this project. To be clear: what that work will do is not create a digital euro itself, but create the legal framework for the possible issuance of a digital euro at a future point in time.

Issues that ministers discussed here today were the importance of developing a compelling and clear narrative regarding what would be the added value of this development and the difference that it would make to the lives of the citizens of Europe and to the commercial activity of businesses within the European Union. We acknowledge that while there is broad support regarding the project that is underway, within our institutions ministers want to support this work but also look at how we can further develop that narrative.”

Meanwhile, in Slovakia…

The national government recently passed a constitutional amendment to codify the right of its citizens to pay for goods and services with cash. According to an article by Hakon von Holst cross-posted on the German financial reporter Norbert Häring’s largely German-language blog, Geld und mehr (Money and More), it is the first country in the world to take such a step. The ruling is intended to protect physical cash payments from a future in which the digital euro becomes mandatory.

“[The digital euro] may be initially sold as an alternative, but gradually it will become apparent that it can only be exclusive,” said liberal MP Marián Viskupič of the digital euro plans. He warned that it would bring about “monitoring of a person’s entire life” by the ECB and called it “a social engineer’s dream”.

Slovakia’s National Council has also relaxed the country’s cash payment limit, from €7,000 to €15,000, becoming the second country to do so this year, after Italy’s Georgia Meloni government.

The ruling on cash payments will come into effect tomorrow (July 1). But as Hakon von Holst notes, it is full of loopholes (machine translated):

Shopkeepers will have the right to refuse acceptance for “reasonable or generally valid reasons”. There are numerous posible exceptions to this wording, which it is up to ordinary law to decide.

It remains unclear whether the right to cash payment has actually been strengthened, but the symbolic effect cannot be overlooked. Some media also reported abroad. Slovakia is the first country in the world to include cash payments in the constitution.

The concerns of Slovakian MPs appear to be well justified. As Häring himself reported yesterday, the Europe Commission is also preparing draft legislation on the status of cash as legal tender. That legislation, if approved, would make it easier for retailers in the Euro Area’s 20 member countries to reject cash payments while giving the digital euro privileged status as legal tender, says Häring:

Cash users would have much less entitlement to their preferred means of payment than users of digital euro central bank money. It is obvious that the EU Commission (together with the ECB) does not want to supplement cash with the digital euro, but rather to replace it altogether.

What Will a Digital Euro Consist Of?

The main innovation offered by retail CBDCs is that they will provide all citizens and businesses with direct access to central bank money that can be used in digital payment transactions. This, it is argued, will help to preserve the role of public money as more and more citizens abandon cash in favour of digital payment methods. It will also radically simplify digital payment processes by cutting out most of the financial intermediaries that facilitate digital payments today (payment processors, banks, financial clearinghouses, and, if your money is crossing borders, international communication and exchange systems), as well as the juicy fees many of them extract.

But this would only be the case if central banks offered the retail CBDC directly to individuals and businesses, which would mean allowing everyone to hold the equivalent of a current account at the central bank (as long as they have a smart phone and don’t engage in the wrong sorts of behaviour). That is not what is on offer here.

Instead, citizens would hold a special account at a commercial bank that would give them access to central bank digital money. Unlike normal bank accounts, the balance would not be a loan to the bank but rather something more akin to a trust or securities account. The account holder would own the digital euros in the account while the commercial bank would merely manage it as a service provider. The central bank and bank supervision would guarantee that a digital central bank euro and a euro bank deposit retain the same value and can be used in the same way in payment transactions.

In order to protect financial privacy, the ECB’s plans for the euro area envisage offering the possibility of loading the digital euro onto electronic wallets, which can then be used to make direct payments, with the service providers (the banks) constrained to knowing how much money is to be withdrawn.

The proposed features of the digital euro bears a lot of similarities with the digital pound being developed by the Bank of England and the UK Treasury. As with the digital euro, the public interface of the digital pound will be the private commercial banks.* The BoE is considering imposing a limit on the holdings of the new digital pound of £10,000 to £20,000; the ECB is thinking of setting a limit of around €3,000. Neither CBDC will bear interest, though who’s to say whether the central banks might one day apply negative interest rates (one of the oft-cited advantages of CBDCs for central bank policy makers).

No Public Debate

But where is the public debate in all of this?

There is none, or should I say whatever public debate that does occur is despite the almost complete silence on the issue in the mainstream media. Even at election time in most ostensibly democratic nations, CBDCs are not up for public discussion.

It is not hard to see why. On the exceptionally rare occasions that members of the public are actually consulted on the matter, the majority opinion (at least among those with a view on the matter) is overwhelmingly negative. Such was the case in a recent survey conducted in the US by YouGuv and Cato Institute, which found that more than twice as many US citizens are against (34%) a digital dollar than in favour (16%). Most of the people consulted (49%), however, have yet to form an opinion, probably due to their general lack of knowledge of CBDCs.

This is a feature, not a bug, of the rollout of CBDCs in the West (and the rest of the world). As I noted in my March 25, 2022 piece, Unbeknown to Most, A Financial Revolution Is Coming That Threatens to Change Everything (And Not for the Better), “CBDCs are among the most important questions today’s societies could possibly grapple with — not only from a financial or business perspective but also from an ethical and legal standpoint. They should be under discussion in every parliament of every land, and every dinner table in every country in the world.”

That is not happening. Instead, they are being rushed through as quickly as possibly with virtually no public debate whatsoever. As the YouGuv / Cato survey suggests, most people do not know (and in some cases, perhaps do not even care) what CBDCs are, or how their implementation could impact their lives. And that suits the central banks just fine.

Yet despite the almost total absence of public debate around the adoption of CBDCs, a push back of sorts has already begun in some countries. In Switzerland, where cash remains the point-of-sale payment method, the Swiss Freedom Movement (FBS), a pressure group with libertarian leanings, announced in February that it had collected enough signatures (111,000) to trigger a national vote on preserving cash for posterity. Across the border in Austria, whose citizens are equally fond of cash, 530,000 citizens signed a referendum last year calling for “unrestricted cash payments.”


* The last thing the world’s central banks want to do is wipe out large private banks, whose interests they tend to serve above all else. In fact, central banks are 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. What the BoE and many other central banks are talking about doing is creating an extra layer of operations within the financial system.

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. In the US, the National Association of Federally-Insured Credit Unions (NAFCU) emphatically warned last year that the issuance of a digital dollar could erode financial stability, arguing that the costs and risks associated with introducing a CBDC are likely to outweigh the touted benefits.


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  1. flora

    Thanks for this post.
    First Macron raises the retirement age. Then France and Germany cook up an idea that they alone should have EU veto rights. Now CBDCs imposed from on high. (Nations? What are those?)
    Methinks it’s going to be a long, hot summer in Europe.

  2. ambrit

    Link this to the recent UN scheme of “iVerify” and the Panopticon becomes visible. The proper function of the Panopticon is to surveil the Public while maintaining secrecy for itself. Thus, through iVerify, the CBDC operates as a means of focus for State surveillance.
    The secondary effect will be to further disempower the “deplorables” in the, really, outside of, the Society. The ‘unbanked’ will suddenly become “non-persons” within the “official” society. “Disposing” of such powerless deplorables will become easier and thus more savage over time. This is an almost universal process in Terran human societies.
    Who expected The Jackpot to be financialized?

    1. vao

      If CBDC ever comes to pass, this risks turning other non-EU currencies into a means of cash payment for informal economic transactions within the EU. I would expect criminal networks to go this way first, followed by the informal (black) economy, ending up with a significant fraction of the population adopting that foreign cash for under-the-radar payments (which will in any case represent a minority of all payment flows).

    2. JBird4049

      Depending on who you read the American unbanked goes from 7% to 22% and Mississippi is always highest starting from 16%.

      As someone who is planning to squirreling away some cash and has a landline because I have had the joy of no power, phone, food, or money because of no power, I just have to ask if our financial overlords have seriously thought this through?

      Considering our infrastructure, when The Big One hits California or some mega hurricane hits the Gulf Coast we could have a few tens of millions of people having no power.

      1. The Rev Kev

        Washington is so out of touch right now that if The Big One did hit Californian forcing people to revert to a barter economy, that Washington would probably parachute in tens of thousands of IRS people to make sure that people will be paying tax on each barter transaction. :)

  3. The Rev Kev

    Great post this and I guess that it is all about control. They can never control people enough and want to see exactly what people are doing and where their money is going. Of course once you go with a digital currency, it does not stop there. Critics could find their money no longer available and are locked out. Maybe some do-gooders like the modern Greens will want it used to penalize people who are spending money on what they consider non-environmentally friendly purchases – like gas for the car. And Prohibition 2.0 anyone? Should people be allowed to only spend so much on gambling, booze and smokes per week? Should they be allowed to spend money on erotica and porn? You just know that the PMCs will have all sorts of ideas on how people should be allowed to spend their money because with digital money it will be now possible. Hey, how about compulsory clipping of your money to be sent to the Ukraine? What I am getting at is though it is your money, when it is digital the government will regard it as its money. I have seen this movie before and yes, they do have this attitude. But in any case, if your region loses power or net for a coupla days and cash no longer exists, that will be your problem. You will be on your own and you just know that the government will abandon all responsibility to help you – but will allow corporations (actually loan sharks) to go in and exchange vital goods to you when sign their exorbitant agreements.

    1. flora

      Don’t forget that you can’t have a working CBDC without a digital identity “card”. / ;)

      “What I am getting at is though it is your money, when it is digital the government will regard it as its money. ”

      Head of BIS Agustin Carstens has said this directly. paraphrasing: “CBDC money is an expression of the liability of the central bank.” Nothing there about ownership of CBDC money by the users of CBDC.

      Short clip of Carsten from 2 years ago.

      Bank for International Settlements head Agustin Carstens about CBDC and control

  4. digi_owl

    The one thing that seem to be on central bank’s minds these days is small time black market trading, and thus they want to track every last cent being exchanged between individuals. This by eliminating physical cash, starting with larger denomination notes and moving steadily downwards. Yet at the same time government agencies concerned with crisis management continue to recommend people have an amount of cash on hand for trade while the power is out.

  5. samm

    How long before the Fed cooks up the same scheme? Since Democrat Representative Plaskett threatened Matt Taibbi with jail time over a typo in a Tweet, one wonders how broke you’d be after expressing an unauthorized opinion in such a future.

  6. Susan the other

    In one respect cash is more digital than electronic is digital because the accounting for it is repetitive bean counting ad infinitum. Whereas CBDC would be almost analog by comparison with various programs running in parallel and simultaneously. Like a Central Bank Money Meter. A system being fed all sorts of timely accounting information 24-7. Which almost sounds quantum except it won’t be quantum fast. Yet. The first question I want answered is, What is money and who owns it? If the answer is “the central bank” then the next question is “Who owns the central bank?” And so on. Because when it comes to central banking there is a huge disconnect between public and private money even though it is so commingled it could never be separated. And even the rights and obligations of money should be addressed because we need to protect the mother of all money – Nature. It’s gonna be a can of worms. If central banks attempt to be anything more than bookkeepers it will be very contentious.

      1. Susan the other

        The new CBDC is a fire wall against commingling western currencies, which operate on the Swift clearing system, with BRICS currencies which will create their own clearing system, or already have. So it’s effectively a new iron curtain. One thing it is sure to promote is underground laundries. It’s a given because every time we create a crime (think cocaine or fentanyl) we create a very lucrative black market. So there will be a big black market in money and It will probably deal mostly in commodities of various ilk to establish values. It could be the ultimate clearinghouse for everything between the two systems because everything is transactional, as they say. Or so I imagine it working. And to my thinking, this nexus could control both the natural environment and human economies going forward, if it has the authority to do so. So that requires CBDC oversight which might be an idea whose time has come.

  7. Savita

    Thanks Nick your work is a credit

    RE the machine translated media item about Slovakia being the only country in the world to include cash payments in the Constitution

    Australia has two versions of the Constitution. The second one attempted to supercede the original but didn’t do so legally. So there is controversy between the two. Nonetheless each version has Section 115:

    States not to coin money. A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts.

    Some road users have successfully used this and another related Section to avoid paying e-tolls on motorways in Australia, or the fines for not paying. Its been reported in print media.

    The Currency Act 1965 Australia defines money and coins as legal tender.

    I highly recommend reviewing any legislation current or prospective if in doubt.
    DON’T make the mistake of relying on a quote on a government website or ministerial sound bite about, for example, what you can and can’t do with your money.
    Read the legislation then you are truly informed. As I’ve written previously, I have experience with official government pronouncements both via news media and government websites (Dept of Home Affairs, who are the law makers) being explicitly fraudulent. The context was, they said if you didn’t provide all your personal and sensitive data to the government in advance of flying, you could go to jail. The legislation however plainly, plainly said it was voluntary! Lesson learnt for life, there! I was giving people print outs of the legislation to travel overseas with, prepared for eventually crossing the Australian border later

  8. The Rev Kev

    Found something interesting. The UK’s Nigel Farage says that he may have to leave the UK and why is the interesting bit. He claims that the bank accounts he has had for some 30 years are being closed down on him by his bank and other banks that he has approached won’t touch him. So he is being deliberately unbanked – but nothing to do with the UK government of course. Now imagine if the UK had only digital currency what would have happened to him, or anybody for that matter-

    And imagine this. You live in a country where there is only digital currency and when you go to make a donation to NC, are told that that is not authorized but without any explanation. Tell me that it will never happen.

  9. Piotr Berman

    I make VERY FEW cash purchases, only in the nearby Chinese store that offers 5% cash discount. Given that I am not an exception, I do not understand what the idea of digital currency is: eliminating cash TOTALLY? Affordable debit cards for everyone? Postal bank would do it more simply. All transactions by smart phones? That would be a horror. Personally, I do not own smart phone, laptop is enough for me. Then, when I read about persons harassed by police, first think police does is “take all electronic devices”. On airports, smart phones can be inspected by authorities. Etc.

    On the bright side, bank services seem to be in the discretion of the bank, like Nigel Farage could be denied. One would hope that a service by Central Bank would offer a protection against such mischief. But if the government would have human rights as a priority, it would not deny the right to fly on reasons that are secret and impossible to check or oppose.

    My modest hope is that digital currency could give a bank account substitute and debit card substitute with some well guarded rights of use. Then it could be attractive.

    1. some guy

      The idea of Digital Currency is for the GoverBanking Industrial Complex to force everybody to have all their “money” in the form of Digital SpyMoney which the GoverBanking Lords and Rulers ( and minions and grubby little operatives can totally track at all times in a Panopticon manner.

      And of course they would use it to freeze or vaporise the money or account or whatever of any “citizen” whose existence they deem to be inconvenient to themselves.

      And in the meantime, they would charge a fee/toll/privatax on every transaction that every digital-money-hostage makes, down to the smallest fraction of a cent. A billion fractions of a cent here and a billion fractions of a cent there and pretty soon you’re talking about real money.

      It won’t work if people are allowed a means of escaping it. That’s why all other money will be outlawed if the GoverBank Lords feel they can get away with it.

      1. cosmiccretin

        No, originally the *idea* (or perhaps ideal) of central bank digital currency was conceived-of as a vehicle whereby to segregate a country’s payments system from the issuance of credit (by privately-owned and for-profit commercial banks).

        The concept was that all non-physical (ie non-notes/coins) transactions would be settled through the central bank, wherein the parties engaging in such – non-physical – transactions would have their own accounts. (Settlement in cash would proceed unaffected if and when preferred). The commercial banks could be licensed to act as agents giving access to the CB account of each of their own depositors, on terms to be defined but of course without the moneys transmitted being taken onto banks’ balance-sheets.

        Banks’ loan-business, against collateral, would of course continue.

        What the risks posed for people’s privacy, subjection to state surveillance, incipient totalitarianism, etc, etc, might be as side-effects of that change didn’t at that stage enter into discussion of its merits because that was extraneous to its intended purpose.

        Just saying.

        (I’m not suggesting that those risks mightn’t be significant – even perhaps to a degree such as to outweigh the benefits of extricating the public from the stranglehold of the TBTF banks which their private monopoly over the public payments system gives them).

  10. Candide

    ((( TERRORISM ))) is mentioned by Lagarde as justification.
    So BCDC is a tactic we could reject along with the other items
    in the Veterans for Peace comment,
    “The Army That Can Defeat Terrorism doesn’t wear uniforms,
    or drive Humvees, or call in airstrikes. It doesn’t have a high command,
    or high security, or a high budget. The army that can defeat terrorism
    does battle quietly, clearing minefields and vaccinating children.
    It undermines military dictatorships and military lobbyists.
    It subverts sweatshops and special interests.
    Where people feel powerless, it helps them organize for change,
    and where people are powerful, it reminds them of their responsibilities.

  11. some guy

    I think I remember semi-long-ago when various ” John Birch Society 2.0 ” types of people were going on about how the International Banking Conspiracy had eventual plans for “computerised currency” so that everybody’s spending could be tracked down to every computer penny. And people would be forced to use it by the scheme of declaring all physical money to be “null and void” after a certain time graciously given the citizens to exchange all their primitive money for computer money.

    I remember when all Sensible People dismissed this as the kind of paranoid raving one expected from people who believed in the “existence” of an imaginary “Bilderberg Group”.

  12. Grayce

    Digital cash remains an IOU. Nothing backing it. Of course banks like it. Their IOUs from outstanding loans are listed on the “assets” side of the ledger, just like printing money. However–BIG however–the IOUs are only as sound as the vetting process before granting a loan. If a careless bank lowers its standards just a bit, they raise their so-called assets, while invisibly adding risk. So, take that image into national digital cash. It also is only as good as the backing it has. Who checks up on the risk? That seems to be vaporware like much of visionary software.

  13. Jams O'Donnell

    To take things to an extreme, any currency is ‘only as good as the backing it has’. Cowrie shells worked at a certain time and place, despite having little intrinsic value. Even gold would have no value if the only things in high demand were food and water.

    And even a digital currency would be fine if it had rock-solid guarantees to be solidly and fairly valued (- whatever that might mean), surveillance and interference free and freely available to all.

    Political input is the sand in the porridge, as it is in other areas.

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