While it may seem like a dry technical issue, the stakes are enormous. Politicians and technocrats worry that if the limit is set too high, citizens could pull vast sums from traditional banks during a crisis, jeopardizing the stability of the entire banking system. Some are also concerned that any cap could infringe on personal financial freedom, stoking fears of a “Big Brother” state, according to one diplomat, who like others mentioned in this piece was granted anonymity to speak freely about a sensitive issue.
The struggle is raising a fundamental question: Where does the central bank’s authority end and that of EU member countries begin? Thirty years after the ECB became the bloc’s chief monetary guardian, the clash is forcing a reassessment of the delicate balance between politics and central banking.
For some, it’s a necessary pushback against the ECB’s overreach. But in Frankfurt, officials view it as political meddling in a realm that should be free of it. At its core, as one diplomat candidly put it, the dispute is less about technicalities and more about a “battle for power.”
Technocracy vs. democracy
Over 100 central banks have explored the idea of creating a national digital currency, spurred into action after Facebook’s ill-fated attempt to launch a global cryptocurrency, Libra, in 2019 sent shockwaves through the financial world.
While many of these efforts have since fizzled out, the ECB has remained resolute, championing the digital euro as a game-changing alternative to existing payment systems — one it hopes will loosen Europe’s dependence on dominant U.S. and non-EU payment services, which currently handle around 70 percent of EU payments.
But the central bank’s relentless advance has also spooked key member countries, which now view the project as dangerously technocratic. In Brussels, they’re leveraging their political influence in an attempt to curb the Bank’s power in ongoing negotiations over crucial aspects of the digital euro’s design.
