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The European Central Bank's (ECB) digital euro plans are under scrutiny by members of the European Parliament (MEPs) concerned about its potential impact on financial stability and individual freedoms.
In a written question submitted to the European Commission, MEPs Pierre Pimpie, Pascale Piera, Fabrice Leggeri and Malika Sorel of the "Patriots for Europe" (PfE) party in the European Parliament highlighted the risks associated with the digital currency.
The MEPs, all from the French populist right wing National Rally, argue that although the initiative aims to modernise Europe's monetary system, it could inadvertently centralise economic power and undermine both financial stability and citizens' privacy.
According to the lawmakers, “there are two dangers that must be taken into account”.
“First, commercial banks fear huge liquidity runs as a result of money being transferred to electronic wallets secured by the ECB, which would destabilise those banks and weaken the financial system. Second, the digital euro could become a financial surveillance tool, which raises privacy concerns.”
The MEPs also said they are seeking clarity on the safeguards that will be implemented to prevent the digital euro destabilising commercial banks, especially during economic crises, “while also ensuring a balance between innovation and financial security”.
In addition, they demanded assurances that the digital euro will not become a tool for financial surveillance.
They called for concrete mechanisms to protect citizens' privacy, ensuring that the currency's introduction does not compromise individual freedoms or enable undue monitoring of financial transactions.
A tradition of scepticism
The three MEPs are the latest in a long line of digital euro sceptics in the European Parliament.
For example, as covered by Vixio, in a parliamentary session with the ECB’s Piero Cipollone in September, legislators raised their concerns about both the costs and competition with private sector solutions.
These include the European Payments Initiative’s Wero mobile payment solution, which recently launched across EU member states including Belgium and France.
For example, Spain’s Fernando Navarrete Rojas, who hails from the centre-right European People's Party, said: “Don’t you think we can get better results with less money in terms of increased European sovereignty and increased competition in retail markets just by auctioning this €1bn to the private sector?”
He suggested the private sector might offer better returns than the public sector, and argued that the “rest of the world” is moving away from the idea of central bank digital currencies (CBDC) that focus on the retail sector, instead looking at wholesale solutions.
“All the world, except China — and for the wrong reasons — have decided to skip that project and go to the wholesale CBDC, which is more promising and can do much more,” he said.
In response, Cipollone said that the ECB has been trying to provide the infrastructure to ensure that the eurozone can come together on pan-EU means of payments.
Last week, the ECB’s progress report was released, and shared in an open letter to Aurore Lalucq, chair of the European Parliament’s Committee on Economic and Monetary Affairs (ECON).
“Concluding the legislative process in a timely manner will be crucial for giving certainty to the market and taking into account the legislative requirements during the development of the digital euro,” Cipollone wrote.
“Most importantly, it would chart the way towards preserving the role of public money and people’s freedom to pay with it, while strengthening our collective resilience and autonomy.”
A lack of enthusiasm on the right
Right-wingers have consistently questioned the merits of CBDCs.
In the run-up to the US election, President-elect Donald Trump said he will be blocking any type of digital dollar, and Republican-leaning state legislatures such as Florida have enacted legislation doing this.
In May, meanwhile, the US House of Representatives passed HR 5403, the CBDC Anti-Surveillance State Act, which blocks the government from creating or issuing a CBDC.
In the UK, right-wing former MEP and now UK parliamentarian and leader of the Reform Party Nigel Farage has also come out against CBDCs, saying that this is something that “must be resisted”.
The most icy of responses to the digital euro has often come from the right and far right of the European Parliament.
For example, Michiel Hoogeveen, the former rapporteur for legislation such as the Instant Payments Regulation (IPR), was one of the most outspoken critics.
As covered by Vixio, in one of the most testy exchanges between MEPs and the central bank, he said that the ECB was “scared” to explain “what problem the digital euro is solving”.
The Dutch MEP added that Cipollone’s remarks “still go back to a bunch of hand waving, to be frank”.
“Maybe it is good for financial inclusion, maybe it is better for cross-border payments, maybe it is a good replacement for cash as a monetary anchor,” he said.
“The only argument I haven’t heard yet is, China is doing it so we should start doing it as well!”
The exchange between the politician and central banker got so animated that at one point Cipollone responded to the right-wing MEP with: “I don’t think you understand what I said! 69 percent of the market is in the hands of someone else. We should stop fighting amongst ourselves, and think where the real problems are.”
Hoogeveen may have failed to retain his seat in the Parliament, but interventions such as that made by his French counterparts in the National Rally show that the topic is still garnering plenty of concern.
The right’s issues with CBDCs
Ultimately, the digital euro project agitates the right and far right of politics due to conflicts with their ideological principles and policy priorities in a way that other payments legislation in the EU does not.
A key concern is national sovereignty, as groups in the European Parliament such as the European Conservative and Reformist Party (ECR) and the PfE prioritise domestic control over economic policy.
This means they perceive the digital euro as consolidating monetary authority under the ECB, potentially undermining individual governments' ability to manage their economies and further increasing the role of the euro.
Privacy concerns also play a significant role in their opposition, particularly as these groups often position themselves as defenders of individual freedoms.
They worry that a centralised digital currency could enable mass surveillance, allowing governments or EU institutions to monitor financial transactions. This aligns with the broader populist rhetoric about CBDCs in the US and UK.
Not so straightforward
The PfE and ECR are a loud minority in the European Parliament, and other groups, including the European Peoples Party, the Socialists and Democrats of Europe and liberal and green factions have all been more conciliatory towards the prospect of a digital euro.
The latter even highlighted the topic in its 2024 manifesto.
However, the situation is more complex than a simple right-left division.
Domestically in the Netherlands, for example, Mahir Alkaya, a left-leaning politician, said during a debate in 2022 that the digital euro was a test for democracy in the EU and expressed concern with progress so far.
His centrist counterpart Eelco Heinen, meanwhile, said he was concerned about a “stretched mandate” for the ECB.
