Digital Euro: The Threat of a Monetary Revolution

In 2026, the digital euro is set to take a new turn. The adoption of its regulation is on the agenda of European parliamentarians, with a view to its implementation in 2029. While the euro has steadily lost value in recent decades and European countries' budgets are sinking into the red, this digital euro would serve as a relay to maintain the stability of the European monetary system. At a price that no one can yet measure...

Currency is based solely on trust. As it is now almost exclusively created by debt, its value is based on the ability of each economic agent to repay their credit. The global monetary system is therefore based on the sum of our mutual commitments. However, as European countries' debt continues to grow and repayment becomes more complicated than ever, confidence in the euro continues to weaken, making it necessary to establish a new model.

The digital euro, as presented by the ECB, seeks to be part of this shift. This central euro would not be distributed through commercial banks but by the Frankfurt-based institution, in the same way as coins and banknotes, but in a dematerialized form. Unlike debt-based currency, this currency would not be backed by bank credit. Every citizen in the eurozone would then have a bank account with their national central bank. This currency would no longer depend on the resilience of a commercial bank (the risks of which were highlighted by the 2008 crisis) and would therefore be the direct property of its holder, whatever the circumstances. The funds held in these accounts could come either from transfers from traditional bank accounts or from direct payments by the bank as part of exceptional support measures (targeted aid, economic support policies, universal income, etc.). However, this euro would not be presented as an account opened directly with the ECB but would be integrated into existing banking applications via a dedicated option.

This ongoing monetary revolution takes on its full meaning when we consider the risk of a debt crisis, both in the eurozone and elsewhere. With deposit guarantees in all European countries insufficient to protect depositors, a major crisis would result in considerable losses for eurozone citizens. In such a scenario, the digital euro could initially play a rescue role by distributing a currency that is immune to bank failures. While European treaties currently prevent the holding of digital central bank money, this new euro would establish a means of direct transfer between the central bank and a traditional bank account, thereby protecting European citizens' funds. Once such a mechanism is in place, the central bank digital euro would therefore serve as a relay, complementing the existing monetary system. However, given the risk of deposit flight, the ECB believes that amounts held in digital euros should be capped at €3,000 per person and should not bear interest.

The digital euro could then become a new monetary policy tool. By allowing the ECB to inject money directly into citizens' portfolios, it would pave the way for direct support mechanisms. Given the level of public debt in the eurozone and the dilemma facing the ECB, this digital euro could, for example, be injected in sufficient quantities to boost inflation and automatically reduce the debt burden.

The gradual transition to this central, digital currency raises other issues, particularly with regard to individual freedom. This central bank digital currency would allow for greater transparency in transactions and therefore potentially enhanced tracking capabilities. Whether for individual states or within the framework of a European state, this shift could be used to control the spending of each citizen in order to secure the necessary revenue for member states that are currently close to bankruptcy. All defenders of individual freedom should question this development... Paying in cash or holding euros with different intermediaries currently prevents any control over everyday activities. However, if the digital euro were to be introduced, this possibility would disappear. For example, spending deemed inefficient or unproductive by the state could be penalized.

The most contradictory aspect is that this development is being conceived by an independent central bank in accordance with liberalism. But liberalism cannot be the work of a debt-based monetary system. As debts accumulate and economic power becomes concentrated in the hands of a minority, such a system becomes less liberal and more authoritarian, with the state playing an increasingly important role. This trend has already been observed for decades, but could reach its peak in monetary terms with the introduction of the digital euro.

The ECB's primary objective is to maintain confidence in the euro and prevent capital flight, particularly in the face of the rise of cryptocurrencies and the craze for physical gold, the sovereign asset par excellence and a safe haven in times of crisis. This appeal is indeed the logical consequence of the loss of confidence in the euro due to rising inflation since the health crisis. It is also driven by European citizens' desire for sovereignty at a time when globalization is reaching its limits more than ever in the face of successive crises.

Although it is not scheduled to be introduced until 2029, the digital euro could be used earlier in the event of a major financial crisis. While MEPs are expected to adopt its regulatory framework this year, its design could be the subject of a broader debate. Following on from the creation of bitcoin and the consequences of inflation, the digital euro has the potential to fuel the debate on monetary issues. It should therefore encourage everyone to question the existing monetary system, so that currency can regain its role in serving the real economy.