The digital euro is a threat to the very foundations of a free society

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BrusselsReport.eu
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By Austrian Member of Parliament Dr. Barbara Kolm (FPÖ– picture). She has served as the Vice President of the Austrian Central Bank and is also the the Director the Austrian Economics Center in Vienna. She also founded the Free Market Road Show, an initiative whereby conferences dedicated to free market economics are held in dozens of cities across Europe and beyond each year. 

This is a transcript of a speech she gave at the “Golden Years: The Future of Money in Poland” Conference.

Let me begin by stating that I am not a proponent of so-called unconventional monetary policy. Accordingly, my perspective on the actions of the European Central Bank (ECB) and the European Commission in Brussels will be decidedly critical. However, I will strive to ground my remarks in sound economic reasoning—not as a politician or a former Vice-President of the Austrian Central Bank, but as a citizen deeply concerned about the trajectory of EU monetary and fiscal policy.

I do not wish to engage in dogmatic debate over Hayekian theory or the intricacies of central banking. Rather, I would like to highlight something more fundamental: the importance of competition as a process of discovery, as described by Hayek, and the vital role of freedom of choice within any economic system. Competition is not merely a market mechanism; it is the engine of innovation, cooperation, and progress. It enables us to seek better solutions and to challenge the status quo. In any discussion about the future of money, we must not lose sight of this foundational principle.

This is why I listened closely to earlier speeches, especially those addressing the serious consequences of the common euro currency—for which I thank Professor Philipp Bagus. In Poland, as in other nations outside the eurozone, there is growing support for embedding economic freedoms—including the right to choose one’s medium of exchange—within the constitution. Such guarantees are essential to shield societies from top-down centralisation and policy impositions that lack democratic legitimacy.

In Austria, too, the debate over the future of cash is intensifying. The conservative government has pledged to enshrine the right to use cash in the constitution, but it has yet to act. As a eurozone member, our room for manoeuvre is limited—an increasing concern in light of the proposed digital euro.

In recent months, we have witnessed a significant acceleration in efforts by both the ECB and the European Commission to advance this initiative. Let us recall that in June 2023, the Commission gave its formal approval to begin developing a digital currency. Since then, the ECB has vigorously promoted the digital euro, signing framework agreements and launching public awareness campaigns. But let us be clear: this is not an economic project—it is a political one.

Why is the Commission so eager to introduce a central bank digital currency? Consider this: the most advanced country in this area is China. The People’s Bank of China has rolled out the digital yuan in eight provinces and proudly demonstrates to foreign visitors how seamlessly it can be used via smartphone. But is this really the path Europe should follow?

The answer, surely, is no. The digital euro poses a real threat to civil liberties—most notably, freedom of choice. It opens the door to surveillance of transactions, control over monetary flows, and even, potentially, restrictions on how we use our money. This is no longer a matter of convenience; it is a question of freedom and privacy. Once implemented, the digital euro could become compulsory for tax payments, pension disbursements, welfare benefits, salaries, and any transaction involving companies or the state.

Just three weeks ago, ECB President Christine Lagarde admitted that the bank has already begun drafting the legal framework for this project, with full implementation targeted between 2027 and 2028. As an Austrian citizen, I still hope political forces can be mobilised to halt this dangerous course. The digital euro is not merely a new payment instrument—it is a threat to the very foundations of a free society.

Allow me to briefly return to the digital euro and the so-called “cascade model” on which it is based. While many details remain vague, one thing is clear: the ECB is forging ahead and treating this project as a core priority. In my view, this is deeply misguided. These efforts far exceed the ECB’s mandate and represent a troubling expansion of its authority.

When we reflect on recent monetary policy, it is apparent that countries such as the Netherlands and Germany reaped the benefits of prolonged low interest rates. Others—such as Italy and Spain—now struggle with massive debt burdens, largely due to those same policies. When the pandemic struck, the ECB maintained interest rates at artificially low levels for too long. It missed its window to normalise policy during the stable growth period of 2016–2017. Mario Draghi lacked the political courage to raise rates, fearing the consequences for countries that had failed to implement structural reforms.

And by structural reforms, I mean genuine, politically difficult transformations. Only one European leader comes to mind as having undertaken them: Gerhard Schröder. Over twenty years ago, the Social Democrat Chancellor reformed Germany’s labour market and social policy. Subsequent governments have benefited ever since. Austria, Italy, Spain, and France have failed to follow suit. To be frank, France barely knows how to spell “structural reform.”

These failings have brought us to where we are now: reliance on unconventional monetary policies that prop up structurally weak states at the expense of sound ones. We are witnessing the increasing socialisation of public debt—now openly endorsed in the Draghi Report, which calls for joint EU financing of infrastructure, energy, and technology projects. But do we truly need a European super-government to finance the continent? Would it not suffice for national governments to create space for individuals and businesses to thrive?

That, after all, was Hayek’s core message: individuals, not governments, know best what they need. The state’s proper role is to establish rules and safeguard property rights. Yet today we hear constant appeals for “coordinated efforts” involving €750 billion in Recovery Fund spending, common debt issuance, and a “green transition” as a shared obligation. A trillion euros of collective borrowing is now discussed as though it were routine—even as some national constitutions explicitly prohibit such commitments. No one seems to ask how future generations will repay this debt. It is a short-sighted and cynical approach.

This situation raises not only political but moral questions. Decisions taken in Brussels are increasingly shaped not just by elected officials, but also by so-called experts—some of whom pursue personal agendas rather than the public good. Some are dedicated professionals; others are opportunists willing to sacrifice principle for power.

The socialisation of debt—especially when combined with asset purchase schemes like APP, PSPP, and PEPP—is a recipe for the continued erosion of Europe’s competitiveness. It is a policy that rewards debt and punishes reform. In contrast, in the United States, no federal state can bail out another. States may go bankrupt—an approach grounded in accountability. Why then should Poland, or any other country, bear the cost of Austria’s fiscal mismanagement?

Advocates of integration justify collective borrowing in the name of solidarity. They speak of a European social model and narrowing inequalities. It sounds noble—but this is not Christianity. It is a system that defies long-term economic logic. Prosperity cannot be built upon debt.

This brings us to a critical point: the European Union, in its current form, is becoming a morally questionable construct. If one truly wanted to destroy the eurozone, promoting a debt union and joint fiscal obligations would be an effective strategy. This is how central planning works—a system whose destructive effects Central and Eastern Europe experienced firsthand. You, the Polish people, remember the legacy of communism. You know where planned economies lead. Today, it is the West that appears to have forgotten.

TARGET2 imbalances, the absence of balanced budget requirements, and entrenched systemic flaws all create conditions ripe for fiscal irresponsibility. Nations accumulate debt on the assumption that others will foot the bill. It is a financial pyramid scheme—and a direct threat to the ideal of European solidarity.

We must therefore ask ourselves: do we truly wish to continue along this path? Should Poland adopt the euro? Is it worth relinquishing monetary sovereignty and transferring control of policy to institutions with no accountability for their decisions?

Proponents of euro adoption often cite the same arguments: increased foreign investment, lower interest rates, greater influence within EU institutions, price transparency, and supposed economic efficiency. These are repeated like mantras. Yet in my view, none justify surrendering monetary independence. None warrant trading the autonomy of the National Bank of Poland for participation in a system that increasingly resembles a political and financial trap.

Speaking of sovereignty, let us recall one of the EU’s founding principles: subsidiarity. Decisions should be made as close to the citizen as possible. In practice, this means that national governments are better placed to manage local affairs than a distant Brussels bureaucracy. This principle should apply to monetary policy as well. Why should institutions located thousands of kilometres away determine the fate of our money, our savings, and our taxes?

Poland has weathered several economic shocks without the euro: the global financial crisis, the pandemic, and the war in Ukraine. You have demonstrated the capacity to act independently and effectively. Under such conditions, surrendering monetary control would be a mistake. The risks are real: conversion costs, inflationary shocks (as seen in southern eurozone countries), and long-term structural damage.

The European Green Deal, the extensive money printing under QE programmes, post-pandemic supply chain disruptions, the energy crisis, and the war in Ukraine—all contribute to inflation. Yet in Brussels and Frankfurt, these are used as convenient justifications for further centralisation. The “ReArm Europe” initiative is just one such example. Rather than defending Europe’s fundamental values, politicians are quietly introducing freedom-limiting policies.

The European Green Deal, large-scale money printing through QE programmes, post-pandemic supply chain disruptions, the energy crisis, and the war in Ukraine — each of these, in isolation, contributes to inflation. Yet in Brussels and Frankfurt, they are conveniently used as pretexts to advance further centralisation of power. The slogan “ReArm Europe” is just one such example. Rather than upholding Europe’s fundamental values, politicians are quietly introducing policies that curtail individual freedoms.

Consider the increasing restrictions on the use of cash: a €10,000 limit is currently being proposed, above which cash transactions would be prohibited. Meanwhile, the digital euro looms on the horizon, and a new EU institution — AMLA (the Anti-Money Laundering Authority) — will have full knowledge of each citizen’s financial assets. The space for privacy and freedom of choice is shrinking rapidly.

When European Commission President Ursula von der Leyen proposes the creation of a ‘Union of Savings and Investments’, openly citing the need to “mobilise citizens’ private savings”, one must ask: is this still freedom, or has it already become its violation? We already have the Banking Union, the Capital Markets Union, the Migration Union, the Debt Union — what’s next? A ‘Union of Private Life’?

On 6 March, Portuguese Prime Minister António Costa hosted EU leaders, during which von der Leyen unveiled a five-point plan. First: activating national ‘escape clauses’ from the Stability and Growth Pact, effectively sidelining the Maastricht criteria. Second: a new €150 billion defence loan facility. Third: the redirection of Cohesion Funds towards military expenditure. Fourth: a new European Investment Bank initiative aimed at ‘mobilising private capital’ through the Capital Markets Union. Beneath this seemingly harmless label lies a clear ambition to integrate pension funds, savings schemes, and long-term investments — all under the banner of ‘arming Europe’. In plain terms, the Commission seeks access to citizens’ private savings to pursue its political agenda.

Freedom is not something to be taken for granted. It must be defended, spoken about openly, and safeguarded through deliberate and conscious choices — especially at the ballot box. Our dignity is rooted in our liberty. That is why it is essential to scrutinise the actions of Brussels closely, to understand whom we follow, and to whom we are entrusting control over our lives.

Let Poland remain sovereign. Let it keep its currency. Let it not fall for the illusion that central planning can deliver prosperity. History has shown us all too clearly how that story ends.

This article was originally published in Polish on the website of the Warsaw Entreprise Institute

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