If a wallet is issued by government and you are the only one that can see the amounts, then government can ask for a view key with which they can confirm your balance.

This way there’s no way for anyone to store digital euros outside of government issued wallets.

I guess you could also do zero knowledge proofs to allow more privacy preserving queries compared to a view key.

But currently it is certainly possible to keep amounts and transactions private while at the same time have mechanism where a third party can inspect the true details but not require privacy preserving keys.