• The European Central Bank (ECB) is accelerating its plans for the launch of the digital euro. On 6 March, the ECB held its monetary policy meeting, at which it decided to lower interest rates again** despite the fact that inflation in Europe remains uncontrolled**. As usual, its president, Christine Lagarde, gave a press conference to explain this decision as well as her outlook for the European economy. However, she was also asked about an issue that aims to transform the monetary landscape of the Old Continent: the digital euro.

• Asked (you can read the hearing here) about her agency's plans for the implementation of the digital euro after US President Donald Trump rejected the creation of a digital dollar by the Federal Reserve, Lagarde revealed her haste to implement the European project.

The rush for the digital euro

According to the central banker, the ECB is in the process of "accelerating the pace" of implementing the digital euro in order to push it forward "with all the stakeholders (i.e. the European Parliament, the European Council and the European Commission) so that, finally, we do not write it off, but make it a reality", she replied. ‘The deadline’ that the ECB has set itself to bring it forward is October 2025.

‘We are preparing for that date,’ Lagarde added. However, ‘we will not be able to move forward unless the other parties, the stakeholders (Commission, Council and Parliament), complete the legislative process’. Lagarde considers the implementation of the digital euro "crucial", and "for agnostics or sceptics, it now seems more relevant and imperative than ever", she said.

Lagarde's words have been the subject of controversy ever since. For example, among associations for the defence of cash in Spain, such as Denaria, Lagarde's haste has caused concern. "We have nothing against the digital euro, but they were talking about 2027 and now we are talking about 2025. The only thing we are asking is that the digital euro be treated in the same way as cash, but we still don't know how they are going to do it. There is a lot of uncertainty", says the president of Denaria, Javier Rupérez.

For years, Denaria has been denouncing the numerous barriers to the use of cash in Spain. One of the most damaging is the decision of the government of Pedro Sánchez to limit cash payments to 1,000 euros under the excuse of the ‘fight’ against fraud and the black economy. Rupérez denounces that "we are the most restrictive country in Europe" with this threshold.

A tool for social control?

For the president of Denaria, the intention of the central banks in creating these digital currencies (also called CBDC) ‘is clearly to counteract cryptocurrencies, which, with a decentralised, encrypted and anonymous system, are threatening the currency monopoly of the states.

Although the ECB assures on its website that the digital euro ‘would be a complement to cash and not a substitute’, there are well-founded suspicions that doing away with cash (or encircling it even more) would be one of the objectives of the launch of digital currencies (also known as CBDCs).

One of the keys lies in the interest of the monetary (and political) authorities in putting an end to the anonymity of payments. An example of this was Lagarde's disturbing speech in 2022 about the ‘total anonymity’ of this common digital currency. She said that ‘total anonymity, such as that offered by cash, is not, in my opinion, a viable option’ for the new digital currency. With these words, Lagarde was admitting that her own project would not provide the same levels of privacy that cash provides to the population.

"For national security"

"Physical money has principles and values that digital money cannot achieve. First, it is a secure payment because if there were only digital money, what would happen if the system went down or there was a national emergency?" asks Rúperez. ‘Cash has to be defended for national security,’ he adds. Second, ‘cash guarantees a private payment’.

Although the ECB promises that ‘the design’ of the digital euro ‘would provide a higher level of privacy than is generally offered by other digital payment methods’, it is true that anonymous payment is truly guaranteed with cash. According to the ECB, ‘the Eurosystem would not identify individuals by their payments’, but there is no doubt that the ECB would be the custodian of the data, so there is no guarantee as to how the central bank itself or the states will treat this information in the future. Another risk would be that of computer attacks.

For all these reasons, the president of Denaria insists that ‘the digital euro should not coexist without physical money under any circumstances’. In view of the threats to cash, Denaria is holding the conference "Financial inclusion in Spain. Cash as a financial and sustainable solution".

Source: Libremercado