The European Central Bank published its latest progress report on the digital euro this month, confirming that the project remains on track for a potential launch in 2027-2028. The ECB describes it as a central bank digital currency — a digital form of the euro, issued by the central bank, available to all citizens, and designed to complement rather than replace cash.
That description is accurate as far as it goes. It does not go far enough.
What a CBDC Actually Is
A central bank digital currency is money that exists as a direct liability of the central bank, held in accounts that the central bank controls. Unlike the commercial bank deposits that most people currently hold, a CBDC is not intermediated — the central bank has a direct relationship with every holder.
This changes the nature of money in ways that have no historical precedent.
Currently, when a government wants to restrict what you can do with your money, it has to work through commercial banks, which have their own legal obligations, their own compliance processes, and their own institutional interests in maintaining customer relationships. This creates friction — not enough friction to prevent government overreach when it is determined, but some friction.
A CBDC eliminates that friction. If your money is a direct liability of the central bank, the central bank — which means the government — can, in principle:
Set expiry dates on money so that it must be spent within a certain period.
Restrict spending to certain categories.
Exclude certain vendors or businesses from receiving payment.
Freeze individual accounts directly, without going through a commercial bank.
Implement negative interest rates that directly erode savings.
None of this is science fiction. All of it is technically trivial once the infrastructure exists. And the infrastructure is being built.
What the ECB Says About This
The ECB has been explicit that the digital euro will have privacy protections. It has committed to not using transaction data for surveillance purposes. It has proposed limits on individual holdings to prevent disintermediation of commercial banks.
I take these commitments seriously as statements of current intent. I do not take them seriously as permanent guarantees.
Institutions change. Governments change. The powers that are built into infrastructure are the powers that the next government inherits. The ECB's current governors are not the ECB's future governors. The political environment in which these commitments were made is not the political environment in which they will be tested.
The question is not whether the ECB intends to use the digital euro to control behaviour. The question is whether the infrastructure, once built, will be used for that purpose by some future government under some future crisis.
History's answer to that question is unambiguous. Governments use the powers they have. Emergency powers become permanent. Temporary restrictions become normal practice. This is not a conspiracy theory. It is documented history.
What You Should Be Doing
For my clients, the digital euro development is one more argument for the approach I consistently advocate: diversify across jurisdictions, maintain assets outside the EU digital financial infrastructure, hold physical gold as a genuinely government-independent store of value, and ensure that your financial life does not depend entirely on any single sovereign's goodwill.
The digital euro, if it launches as designed, will be a convenient and functional payment system for everyday transactions. Most people will use it without incident.
But the possibility of using it as a tool of financial control — whether by the current ECB, a future government, or a future crisis response — is precisely the kind of low-probability, high-impact risk that intelligent planning should address.
Do not keep all your financial life inside a system that a single institution can, in principle, freeze.
Work with Sebastian
If the digital euro and the broader trajectory of European financial surveillance is part of your thinking about jurisdictional diversification, this is exactly the conversation I am having with clients who are paying attention to the direction of travel. Book a consultation.