The European Central Bank is testing the digital euro.
Officially, it is not supposed to replace cash, but experts advise vigilance - consumer advocates have also spoken out.
Frankfurt - The European Central Bank recently made a groundbreaking decision: It softened the previous goal of price stability.
The European Central Bank also initiated another large project, which could be in the same context: In July, the ECB sent the digital euro into a 24-month test phase in order to examine its “advantages and difficulties”.
Digital cash could come in 2026 - but what does that mean for consumers?
Digital euro - what is it?
There are basically two different types of money: central bank money and commercial bank money.
"The savings are safe," assured Chancellor Angela Merkel and iPeer Steinbrück during the financial crisis in 2008. The Chancellor and her then finance minister wanted to prevent a storm of counters in which citizens would convert money from commercial banks into cash and thus into safe central bank money.
As the Lehman Brothers case shows, commercial banks can go bankrupt, but central banks cannot.
Like cash, the digital euro would be secured directly by the central bank.
So far, only commercial banks have access to central bank money, with the digital euro private individuals could also have access to it.
Hence the term “digital cash”, which means that the smartphone becomes a wallet.
Why is the ECB considering introducing the digital euro?
One background: crypto currencies such as Bitcoin, Ethereum or Parachains such as Polkatdot are enjoying strong popularity.
The central banks are critical of this development, as cryptocurrencies can do without central administration and their verification is carried out using cryptographic mechanisms.
Crypto users trust in the technology, trust in institutions such as the ECB as a “middleman” would become obsolete.
The digital euro is an attack on cryptocurrencies, as Fabio Panetta, member of the ECB's board of directors,
confirmed
to the
Financial Times
.
The introduction of a digital euro would protect the euro zone from the threat of competing cryptocurrencies that could undermine monetary sovereignty.
"If people want to pay digitally and we don't offer them a digital means of payment, someone else does it," continued Panetta.
Federal Finance Minister Olaf Scholz (SPD) finds the new course set by the ECB "groundbreaking".
What does the digital euro mean for consumers?
Critics view the digital euro with skepticism.
On the one hand with regard to privacy - because cash can be used to pay anonymously without leaving digital traces.
The digital euro could change that.
From a technical point of view, earmarking of the digital euro is also possible.
The influence of the state could thus increase.
In China, people can already pay with the digital yuan.
On the other hand, critics also see the possibility of currency devaluation through the back door - especially with regard to the current excess money and the low interest rate policy.
For example, the former President of the Ifo Institute, Hans-Werner Sinn
, said
in an interview with
Standard
that the digital euro "sounds good at first because it is very safe money."
“But those who want the digital euro - at least according to the scientific articles at the IMF - they want it because they can charge negative interest on digital money.
And not just on the surrogate money that the banks created, but on the real central bank money. "
The aim is then to regularly devalue the cash relative to the digital central bank money, at an annual rate that corresponds to the negative interest on the digital money, according to Sinn.
"Then people can no longer avoid negative interest rates by holding cash," the professor emeritus explained.
Cash is already on the decline, the political consequences are problematic: "When the cash is gone, the lower interest rate limit is gone from zero, and then a policy of negative interest rates can be pushed at will." The ECB board member Fabio Panetta, however assures: "In any case, a digital euro would only complement cash and not replace it."
Digital euro: what are consumer advocates asking for?
The ECB has already announced that the digital euro will meet various requirements.
For example, it has to be easily accessible, robust, safe and efficient.
In addition, privacy must be preserved, the ECB said in a press release.
It should also be compatible with the solutions of providers of private payment services.
The Federal Association of Consumer Centers (vzbz) commented on last Thursday in a position paper on the digital euro. “Cash is coming under pressure, which makes it difficult for consumers to access legal tender,” says the consumer advocate. They demand that the digital euro enables anonymous payments, it should also be accessible to all consumers, make payment transactions more secure from technical failures and consumers more independent of commercial interests in payment transactions. The new “digital cash” also requires reliable rules.
“The cash must be made future-proof,” demand the consumer advocates. "In order for consumers to have the choice of how they want to pay in the future, a package of measures is needed that guarantees the easy availability of cash and its universal acceptance in retail in the long term," said the consumer advice center. A look at Sweden shows how quickly cash can disappear with the right measures. Experts therefore advise monitoring developments carefully.