2024-08-18 21:38:10
The ECB wants to bring the digital euro to market. But many in the Eurozone’s strongest economy are wary of it. Where do their concerns come from? The first item is in Cochem.
It is a picturesque town, about 100 kilometers from Frankfurt. There lies a shelter that for decades was one of Germany’s best kept secrets.
The reserve currency of the Cold War
Built in 1962, the cavernous facility housed alternative German marks, in case West Germany’s enemies flooded the market with counterfeit notes aimed at fueling hyperinflation.
Ultimately, the reserve currency did not need to be put on the market and was destroyed in 1988. However, concern among Germans about the safety of their money persists. A little more than a year before the final decision on whether to launch a digital version of the euro, roughly half of citizens in Europe’s largest economy can’t even imagine using it, Bloomberg reports.
Breach of personal data and privacy is the overriding concern, which is actually turning many Germans back to cash. A group of local pensioners in Cochem who spoke to Bloomberg appeared extremely skeptical about the prospect of a digital euro.
One former bank employee said paying by card and online already made her feel like she had no control over her spending. Others have commented that a digital currency could leave Germany dangerously dependent on the technology.
Hans Heinrich Kleppel, who retired from Deutsche Post in 2010 and helped organize Bloomberg’s trip to Cochem, prefers to use cash most of the time, though “out of habit, I guess.”
How the ECB responds to fears
The European Central Bank, which is developing the digital euro and will make a final decision on whether to implement it in late 2025, is aware of the fears. For privacy and security, it plans to use techniques such as data encryption to prevent a direct connection between transactions and specific users.
In addition, it will make the currency available via card — not just on mobile phones — for offline use. It will also seek to reach citizens with more limited digital literacy and offer vulnerable groups, including asylum seekers, the opportunity to make use of it.
“We envision a digital euro as a digital form of cash that can be used for all digital payments, coexisting with physical cash, leaving no one behind,” ECB President Christine Lagarde wrote in October in X as it began its preparation phase project.
It’s not just the Germans he needs to convince. Countries such as Austria, Slovakia and Malta are even more focused on cash, even as nearby eurozone members such as the Netherlands eschew it almost entirely in favor of digital solutions.