Case Overview: The Digital Euro

Case Metadata

• Case ID: case-006-digital-euro
• Status: Active Investigation
• Date Opened: 2026-01-28
• Last Updated: 2026-01-28
• Priority: High
• Lead Investigator: DOGE Europe Research Team

Executive Summary

The European Central Bank is building a Central Bank Digital Currency (CBDC) — the digital euro — that could fundamentally reshape how 350 million Europeans transact. With an estimated cost of €1.3 billion for ECB development alone, plus €4-5.8 billion in banking sector implementation costs, the project promises to complement physical cash but raises profound questions about surveillance, financial freedom, and whether it solves any real problem.

The ECB completed its preparation phase in October 2025 and is now building technical infrastructure ahead of a possible 2029 launch. EU legislation is expected to face a close parliamentary vote in H1 2026. Meanwhile, every existing CBDC deployment globally — from China's e-CNY to Nigeria's eNaira — has struggled with adoption or required coercive measures to gain traction.

Key Finding: The digital euro creates infrastructure capable of unprecedented financial surveillance and control, regardless of current policy promises. The cost-benefit case is weak: it offers no clear advantage over existing payment systems (SEPA instant payments, card networks, mobile wallets) while introducing systemic risks to bank deposits and individual financial privacy.

Key Figures

The Problem

1. A Solution Looking for a Problem

The eurozone already has well-functioning payment infrastructure:

• SEPA Instant Payments — real-time bank transfers across the eurozone
• Card networks — Visa, Mastercard widely accepted
• Mobile payments — Apple Pay, Google Pay, local solutions
• Cash — still widely used and legally protected

The ECB's stated justifications — financial inclusion, European payment sovereignty, complementing cash — are undermined by the fact that existing systems already serve these purposes. A peer-reviewed paper in Digital Finance found "essentially no discernible benefit to customers."

2. Surveillance Infrastructure

Every digital euro transaction would be recorded on a centralized ledger controlled by the ECB/Eurosystem. While the ECB promises privacy protections:

• Online transactions require identity-linked wallets (AML compliance)
• Offline transactions face usage caps that push users into the traceable online system
• The technical capability for full transaction surveillance exists regardless of current policy
• Future governments could repurpose this infrastructure — a concern raised by France's CNIL and the European Data Protection Board

Dr. Patrick Schueffel warns the infrastructure "can be abused for surveillance and control like no other in human history."

3. Programmability Risk

The ECB explicitly states the digital euro "will never be programmable money." However:

• The technical infrastructure can support programmability
• China has already tested programmable features with the e-CNY (expiration dates forcing spending)
• Current promises are policy choices, not technical limitations — they can change
• No constitutional or treaty-level prohibition on future programmability exists

4. Financial Stability Risks

The digital euro threatens commercial bank deposits through disintermediation:

• €3,000 holding limit: Up to €739 billion deposit outflow (European Banking Federation study)
• Smaller banks hit hardest: 7% of total liabilities vs. 3% aggregate
• Bank run acceleration: Digital euro enables instant, frictionless movement from bank deposits to central bank money
• "Reverse waterfall" safeguard: Excess balances auto-swept to bank accounts — but this reduces the digital euro's utility

The holding limit paradox: making it useful threatens stability; making it safe makes it pointless.

5. The CBDC Track Record

No CBDC has succeeded in voluntary adoption anywhere:

• China's e-CNY: Despite state backing since 2019, adoption remains a fraction of existing mobile payments. In January 2026, China made it interest-bearing (a global first) to boost adoption — an implicit admission of failure.
• Nigeria's eNaira: Widely considered a failure. Only 0.5% adoption after one year. The government engineered a cash shortage to force adoption, triggering protests and riots.
• Academic verdict: A Wiley-published paper titled "So far, Central Bank Digital Currencies have failed" surveys the global landscape.

Cost-Benefit Analysis

Costs (Conservative)

Benefits (As Claimed)

Key Questions

Primary Investigation Questions

1. Who benefits? If consumers don't need it and banks don't want it, who is the digital euro actually for?

2. Surveillance scope: What data will be collected, by whom, and under what legal frameworks can it be accessed?

3. Irreversibility: Once the infrastructure is built, can it realistically be dismantled if concerns materialize?

4. Democratic legitimacy: Is a close parliamentary vote sufficient mandate for infrastructure that affects every citizen's financial life?

5. Cost justification: How does the ECB justify €7-8 billion+ in costs for a product with no demonstrated consumer demand?

Secondary Questions

1. Why did the ECB select Amazon for UI prototyping given the project's European sovereignty framing?

2. What safeguards prevent future governments from enabling programmability or removing holding limits?

3. How will the digital euro interact with the EU's broader push for digital identity (eIDAS 2.0)?

4. What is the environmental impact of running additional payment infrastructure?

5. Could the funds be better spent improving existing payment systems?

Key Entities

ECB / Eurosystem

• ECB Governing Council — Ultimate decision-making body
• Fabio Panetta — Former ECB Executive Board member, led digital euro project
• Piero Cipollone — Current ECB Executive Board member overseeing digital euro

EU Legislature

• European Commission — Published regulation proposal (COM/2023/369), 28 June 2023
• European Parliament ECON Committee — Rapporteur: Fernando Navarrete Rojas
• Council of the EU — Agreed negotiating position 19 December 2025

Technology Providers (Selected October 2025)

Framework contracts worth up to €237 million.

Consultancies (Engaged 2022)

• Accenture, BearingPoint, Deloitte, Oliver Wyman, Roland Berger

Critics and Oversight

• CNIL (France) — Called for democratic debate and privacy by design
• European Data Protection Board (EDPB) — Privacy concerns
• European Banking Federation — Commissioned deposit outflow study
• Dr. Patrick Schueffel — Academic critic on surveillance risks

Investigation Scope

In Scope

• Cost-benefit analysis of the digital euro vs. existing payment systems
• Privacy and surveillance implications
• Programmability risks and safeguards
• Impact on commercial banks and financial stability
• Legislative process and democratic accountability
• Comparison with global CBDC implementations
• Vendor selection process and European sovereignty claims
• Interaction with eIDAS 2.0 digital identity framework

Out of Scope

• Technical cryptographic implementation details
• Monetary policy transmission mechanisms (academic focus)
• Wholesale CBDC (interbank settlements)

Initial Hypotheses

1. No voluntary adoption: Like every other CBDC, the digital euro will fail to gain voluntary adoption, leading to coercive measures (cash restrictions, mandatory acceptance, incentive schemes).

2. Surveillance creep: Privacy protections will erode over time as AML/CFT regulations expand, eventually enabling comprehensive financial surveillance.

3. Vendor lock-in: Despite European sovereignty framing, the project will create new vendor dependencies with the selected technology providers.

4. Political momentum over merit: The project continues because of institutional momentum and sunk costs, not because of demonstrated need.

Research Methods

• ECB published documents and press releases
• EU legislative tracking (Commission proposals, Parliament reports, Council positions)
• Academic literature (Digital Finance, BIS working papers)
• Freedom of Information requests to ECB and national central banks
• Analysis of vendor contracts and procurement processes
• Comparative analysis of global CBDC deployments
• Expert interviews (central bankers, privacy advocates, banking sector)

Related Investigations

• Case 005: Belgian Procurement System — Procurement patterns relevant to vendor selection