The efficiency-legitimacy matrix: a law-and-economics qualitative framework for programmable central bank digital currencies

Can a state embed use-conditions in its currency expiry dates, category restrictions, or geographic limits without transforming money from a neutral medium of exchange into an instrument of governance? This article examines programmable central bank digital currencies through a joint law-and-economics framework that combines transaction-cost economics, mechanism design, welfare analysis, and constitutional public-law reasoning. Its central contribution is an efficiency-legitimacy matrix for evaluating CBDC use-conditions along two dimensions: comparative welfare performance relative to feasible, less intrusive alternatives, and compatibility with legality, necessity, proportionality, and institutional competence under the European Convention on Human Rights. The matrix is designed to discipline judgment rather than replace it. It suggests that mandatory base-money programmability will rarely be justified unless it is strictly time-limited, grounded in genuine emergency, and accompanied by a meaningful alternative or functionally equivalent opt-out. It also suggests that the more stable arrangement is a neutral monetary base with optional, purpose-bound layers authorised by primary legislation and constrained by safeguards against coercive, opaque, or rights-infringing design.