Doomed to Accept The Digital Euro. Are Concerns No Longer Taken Seriously?

On October 18 of this year, the Governing Council of the European Central Bank (ECB) decided to move to the preparatory phase of the digital euro. This decision was preceded by a two-year

investigation phase. As a result, the European currency is far behind the Russian and especially the Chinese. In Germany, the digital euro is highly controversial.


Officials explicitly state that the preparatory phase does not yet equate to a decision on the introduction of the digital euro. For example, Burkhard Balz, a member of the German Bundesbank’s Executive Board, emphasizes that it is not the European Central Bank (ECB) that will determine how to proceed. “The European Parliament and the European Council must decide on the introduction of the digital euro. To some extent, decisions by national parliaments are probably also necessary.”(1)

But given the preparations that have already been made, with the corresponding financial outlay, and especially the pressure emanating from global developments on this issue, it seems unlikely that this project will be rejected. After all, “93% of the world’s central banks“(2) are now working on digitizing their currency. Especially the biggest competitors of the political West are already much further ahead with their developments.

The Russian central bank, for example, has already started the introduction of the digital ruble at 13 banks and with 600 individuals this year. In practical terms, this means that “at 30 points of sale in eleven Russian cities”(3) it will be possible to pay with the digital currency. From 2025, it will then be issued to all interested Russians..

China is even further ahead with its digital yuan. “After nearly eight years of research, the e-CNY [electronic yuan] was released for the first time at the 2022 Winter Olympics“(4) even to foreigners. By January of that year, the app provided by China’s central bank for setting up digital wallets “had already been downloaded 261 million“(5) times. This corresponds to almost one fifth of the Chinese population.

New roads

As with the New Silk Road (Belt and Road Initiative=BRI), the Chinese efforts to create the digital yuan were efforts to create the digital yuan were initially ridiculed by the political West. In the certainty that they would dominate the global flow of goods and finances with the dollar, euro, Swiss franc and British pound as reserve currencies, they presumably saw little reason to digitize their own means of payment. They felt that their own dominance would be secure and unassailable and unassailable. Even Augustin Carstens, as head of the Bank for International Settlements – the central bank of the central banks, so to speak – was still in office. the central bank of central banks – was still of the opinion in January 2021 that the “benefit for consumers is limited“(6) and that the “e-euro should only be used as a means of payment by banks and companies“(7). as a means of payment.

With the emergence of Bitcoin(8) , new developments emerged in response to the uncertainties that the financial crisis of 2007/8 had caused among many people. Cryptocurrencies were intended to remove the state’s control over citizens’ private assets, and also to also hedge against dislocations feared from sovereign and corporate debt, as well as inflation potentially arising from the expansion of the money supply.

While the Western-oriented financial system was still alienated from Bitcoin, the Chinese government had very soon realized the benefits of the blockchain technology underlying Bitcoin for the development of its own financial system and economy. This was because, unlike in the West, finance was poorly developed, especially in rural China. The supply of banks was inadequate, which hindered lending and thus economic development.

In the blockchain, the Chinese government recognized very early the possibilities of simplifying and expansion of payments, as well as the potential for lowering costs. Accordingly, it strongly promoted its development, so that today China is considered a leader in this field.

The shift away from the dollar did not play a role at that time. But that changed very soon with the global increase in Western sanctions, economic and political tensions between the West and China, and the rampant use of the dollar as an economic and political bargaining chip. As a result, sanctioned countries stepped up efforts to digitize their currencies in order to become less dependent on U.S.-dominated financial structures such as the SWIFT settlement system. After all, the sanctions imposed on Russia for its annexation of Crimea in 2014 were already indicative of a trend in international relations.

Central banks under pressure

But digitization also put pressure on the supremacy of Western currencies from another side. Mark Zuckerberg, the head of Facebook and the Meta Group, brought a private currency into play with the Libra, which threatened to escape the control of central banks. This was the first time that Western states felt their monetary sovereignty was directly threatened.

After all, national digital currencies such as the Chinese or Russian ones were the creation of a national central bank, intended for its own territory. Libra, however, transcended national borders and was intended as a global currency. It was primarily intended to serve the private profit interests of the Meta/Facebook empire. With its possibility of cheaper financial transactions, Libra represented competition for commercial banks in the area of global payment transactions.

Now the central banks of the leading Western countries were also pricking up their ears. Unlike Bitcoin, a private company with a corresponding financial volume, a global presence and hundreds of millions of users was threatening to outstrip the central banks themselves and compete with them. The central banks, which had more or less slept through the digitization of the currency, especially in the West, began to rethink their position.

The Europeans in particular saw themselves under pressure to act. “The advantages in digital payments should not only benefit crypto token providers and also big tech companies“(9). The development of a digital euro was also linked to the idea of being able to become less dependent on the American credit card companies that dominate and control the European market.

But another, a longer-term view is now also playing an increasing role in view of the

huge lead that China in particular has already gained in the digital economy. “We, too, want to take advantage of the opportunities offered by technological progress in payments and be prepared for technological options in a digital future world, some of which we are not even aware of today“(10). Although one does not yet know what the future will bring, one does not want to miss out on promising technologies again and fall behind strategically compared to China, as has already happened in electromobility, solar and battery technology, and others.

Difficulties of implementation

But concerns about the digital euro are particularly strong in Germany, the economic heavyweight in Europe. The results of a survey on the reputation of the financial industry in this country brought this to light. “With 40 percent of respondents trusting the financial system, Germany is well below the global average of 59 percent.”(11) Presumably, discussions about the introduction of a digital currency will not help to improve attitudes toward the banking system.

Many people fear that the digital euro could be the first step toward the abolition of cash. cash. At 58%, its use in Germany is very high by international standards, even though its use is increasingly declining. Unlike in China or Russia, where saturation with banks is very low across the country and mainly concentrated in the big cities, in Germany the supply of banks is well covered and access to cash is therefore easy.

Cash promises independence and eludes state control, according to many critics. Those responsible at the ECB and in the organizations of the European Union and its individual states seem to be aware of these concerns. “In the end, of course, what matters is that people embrace the digital euro. That’s why we have to promote this project and make people aware of the many benefits“(12). So they are doing everything they can to increase public acceptance of the digital euro.

Alongside the fears in parts of the population are the interests of the banks, which see their business model threatened. The accounts for the digital euro are direct facilities of the central banks and are managed by them. This means that they are competing with the commercial banks. In an already difficult environment, the latter may find themselves deprived of further sources of income, such as fees for account management and financial transactions. They fear that their business will now largely be cut back to lending only, with a corresponding loss of revenue.

But lending business is also suffering considerably from the current economic situation. The sharp price rises of recent months have led to a decline in demand, particularly in the area of consumer loans. Rising interest rates and deteriorating business prospects for many companies are making them more reluctant to make investments, which are mostly financed by loans. In addition, the sharp decline in construction activity and the weakness of the real estate sector as a whole are weighing on banks’ lending business.

After the financial crisis of 2007/8, the money glut of the central banks and the rampant

debt of the states as well as the deep interventions of the state in people’s habits during the Corona period, many citizens no longer trust the institutions. Some see the state’s actions as driven by interests that are not oriented toward the welfare of citizens. Others no longer trust the state to be able to master the crises that are coming its way. The Western states, but especially Germany, are torn between different, sometimes contradictory interests. Smoothing them out is becoming increasingly difficult.


(1) Frankfurter Allgemeine Zeitung (FAZ) vom 19.10.23: Was der digitale Euro für die Bürger bringt.

(2) ebenda

(3) ntv 15.08.2023: Russland bringt digitalen Rubel an den Start

(4) BTC-echo 22.082022: Was bedeutet der e-Yuan fuer die Chinesen

(5) ebenda

(6) FAZ vom 20.1.2021: Ein digitaler Euro in fünf Jahren

(7) ebenda

(8) Siehe dazu Rüdiger Rauls: Schöne neue Bitcoinwelt

(9) FAZ vom 19.10.23: Was der digitale Euro für die Bürger bringt.

(10) ebenda

(11) FAZ vom 13.07.2023: Kaum Vertrauen in das Finanzsystem

(12) FAZ vom 19.10.23: Was der digitale Euro für die Bürger bringt.