Survelliance Money, or a Better Alternative to Cash?

The digital euro is one of Europe’s most contentious financial projects.

Supporters see it as a way to preserve the bloc’s monetary sovereignty, reduce its reliance on foreign payment providers, and ensure central bank money survives in an online economy dominated by USD stablecoins.

Critics, however, argue the digital euro could be a way for a supranational organization to surveil — and in certain circumstances, even control — the population of Europe.

The official view is that: “The digital euro will reduce Europe’s excessive dependence on non-European providers. It will ensure that Europeans can pay with their money — the sovereign money issued by their central bank — in the digital economy,” said Piero Cipollone, member of the executive board of the European Central Bank (ECB).

The alternative perspective is that the Central Bank Digital Currency (CBDC) may curtail the freedom of citizens to spend money how they wish.

“These are the 8 most dangerous words if you care about freedom: “The digital euro is here to protect Europeans,” said former Deutsche Bank managing director Pius Sprenger.

“This is how they will be able to control EVERY euro you spend. Goodbye money. The ECB will decide how much digital money you can have,” said José Vizner, a Spanish financial commentator.

So who’s right? The suited Brussels bureaucrats who seem to get a kick out of reading your private messages or the tinfoil hat adjacent cypherpunks who want to separate money and state?

What is the digital euro?

The digital euro is a proposed digital form of the euro that would be issued by the ECB, making it a digital form of central bank money, or CBDC.

The term “CBDC” tends to raise the hairs on the back of the necks of privacy-loving crypto folk, invoking 1984-style vibes of government overreach and surveillance.

President Donald Trump signed an executive order to ban CBDCs from the US in January, citing threats to the financial system, individual privacy and the country’s sovereignty. A ban until 2030 was formalized more recently in housing bill legislation. Despite this, the ECB says they’ll do just fine for Europe.

It argues the digital euro would give people living in the euro zone another way to make everyday transactions with central bank money as payments move increasingly online; and that it will complement, rather than replace, physical banknotes and coins.

Not everyone is sold on the benefits of the digital euro. Source: Pius the Banker

“The main reason for issuing a digital euro is to preserve the benefits of cash in the digital era,” Cipellone said in an interview on July 14.

That’s nice, except that one of the major benefits of banknotes that is they can be tracked, traced and frozen at will, as Vizner pointed out. “They promise privacy… but it’s money that’s trackable by design.”

Why does Europe want one?

The ECB obviously isn’t talking up the benefits of spying on everyday payments. Instead, officials argue that as cash use declines, Europe risks becoming more reliant on private or overseas-operated payment systems like Visa or Mastercard.

Some policymakers have expressed concern that the continent lacks control over its critical payment infrastructure, with ECB President Christine Lagarde saying in 2025:

“The entire infrastructure mechanism that allows for payment, credit and debit, is not a European solution… We need to make sure there is a European offer, just in case.”

Consumer groups such as the European Consumer Organization (BEUC) have also highlighted potential benefits for users.

Deputy head of communications, Andrew Canning, told Cointelegraph that the digital euro could provide consumers with a “secure and inclusive” payment option that complements existing solutions, particularly for people who face barriers accessing digital payments.

Yet critics argue that the digital euro would give governments and central banks control over how citizens can spend money.

These fears are not theoretical, even in Western democracies. During Canada’s 2022 Freedom Convoy protests, authorities ordered banks, crowdfunding platforms and other financial institutions to freeze accounts linked to the blockades.

Why do we need a digital euro? Source: ECB

Efrat Fenigson, a tech entrepreneur and privacy advocate, said that the digital euro could become “the infrastructure for programmable money, programmable identity and programmable behavior,” warning that “freedom doesn’t disappear overnight. It disappears one permission at a time.”

Patrick Schueffel, a professor of banking and finance at the Fribourg School of Management, also warned that CBDCs could significantly expand governments’ ability to monitor financial activity.

Are there safeguards?

The EU’s own privacy watchdogs have said the project needs strong safeguards, with both the Data Protection Supervisor (EDPS) and the European Data Protection Board (EDPB) saying a high level of privacy and data protection is essential for the digital euro to gain public trust.

The ECB’s digital euro privacy materials assure skeptics that offline payments will exist to enable ‘cash-like’ privacy and insist that the bank will not see personal transaction data.

Canning told Cointelegraph that the BEUC is “currently happy” with the proposal and that “we trust that consumer safeguards are protected in the final negotiations between EU lawmakers.”

However, the ECB’s arguments may not be enough to persuade the doubters.

How does the digital euro work?

Unlike privately issued stablecoins like Tether or USDC, which are denominated in US dollars, the digital euro would be denominated in euros and issued by the central bank. Consumers would still access it through their regular bank or payment provider.

Unlike physical cash, which people hold directly in their wallets, the digital euro would be accessed through electronic wallets and used to make payments in stores, online, or from wallet to wallet.

The underlying money would remain a liability of the ECB rather than a commercial bank, which supporters say would give it the same public backing as cash rather than being a claim on a commercial bank’s deposits.

Unusual bedfellows: Crypto and the banks

Crypto and privacy advocates have an unusual ally in the fight against the digital euro, as parts of the banking industry isn’t too keen on it either.

They worry a shift to central bank digital euros would reduce bank deposits, forcing them to rethink loans to businesses and consumers.

Lorenzo Bini Smaghi, an Italian economist and banker who served on the executive board of the ECB from 2005 to 2011, said, “There is a high risk of financial instability, with strong repercussions for the real economy.”

The ECB argues that the design choices have been taken to “minimize any potential risks” to the banking sector. Users would be limited to holding a small amount of digital euros in their wallets at any time to “prevent excessive outflows of bank deposits,” and “as with cash in your wallet, no interest would be paid on digital euro holdings.”

Estimated bank deposit outflows by holding limits. Source: ECB

How much will it cost?

The cost of implementing a digital euro has become a bone of contention among critics, as the ECB estimates that it will run to around 1.3 billion euros (approximately $1.5 billion) in investment, with ongoing operating costs of around €320 million ($370 million) annually.

Commercial banks and other payment providers face steep costs integrating the digital euro into their services. The ECB expects implementation costs for the banking sector of between $4.6 billion and $6.9 billion.

When is it coming?

After years of discussions, lawmakers across the European Parliament, EU member states and the European Commission have begun negotiations on the final legislation for the digital euro, and aim to reach an agreement within the next six months.

Cipollone said in an interview on July 13:

“We hope the text will be finalized by the end of the year, at which point we’ll be in a position to take a decision on the future issuance of the digital euro.”

The road to a digital euro. Source: Cointelegraph

If that legislation goes through, the next move will be up to the ECB’s Governing Council, which will decide whether to launch the digital euro sometime in 2027. Europeans are unlikely to encounter it in their everyday lives before 2029, if it is approved at all.

Has this been tried before?

More than 100 countries started exploring CBDCs a few years ago, with most abandoning the idea or shifting to a wholesale model, rather than a retail currency. The few CBDCs in production have not been widely adopted.

China began piloting its digital yuan, or e-CNY, in 2019, later rolling it out across the country. Even though it has processed trillions of yuan in transactions, most Chinese consumers still prefer using familiar payment apps such as Alipay and WeChat Pay.

The Bahamas Sand Dollar project. Source: IMF

The Bahamas became the first country to roll out a nationwide retail CBDC when it launched the Sand Dollar in 2020. While the project was intended to improve financial inclusion, adoption was slower than many hoped, prompting authorities to push for wider distribution through commercial banks.

Elsewhere, Nigeria’s eNaira also struggled to gain traction after its 2021 launch despite strong government support, and Brazil’s central bank shut down its Drex CBDC platform in 2025, citing cost and privacy concerns.

As the Bank for International Settlements concluded in 2023, “a retail CBDC is a complex undertaking, and not only for the central banks.”

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