The digital euro should be like cash: secure and anonymous

Why do consumers use notes and coins to pay? Cash primarily ensures anonymity and privacy during the payment process. In Germany in particular, cash is of great importance as a means of payment, not least because of these core characteristics. However, the corona virus crisis has led to a shift in payment habits: contactless payments are experiencing a real boom. In its latest publication "Report on a digital euro" the ECB emphasized that although cash is, in Germany, still the most widely used means of payment, there is a clear trend towards more use of digital and innovative forms of payment. This change in payment behaviour can be seen not only in Germany, but across Europe. 

Digitisation needs digital money

The euro area must be prepared for the future and be able to react to short-term changes. The introduction of a “central bank digital currency” (CBDC) could be an important stepping stone to take digitisation and innovation in the European society to a new level. The ECB defines this digital euro as an electronic representation of central bank money that is to be made available to both citizens and businesses. Cash is supplemented by the CBDC as a further means of payment.

The design is still to be specified

The ECB has not yet decided on the design. In addition to considering which models are possible, the ECB has defined its (key) requirements for such a CBDC in the above-mentioned report. In the report, the ECB describes the conditions under which the introduction of a digital euro is necessary and the possible approaches to its design.

Feedback wanted

Broad acceptance of the digital euro is essential. In order to assess how the CBDC should be designed and which use cases are best suited, the ECB has sought public opinion on a digital central bank currency in Europe through an online consultation. Citizens, institutions and experts had the opportunity to submit their views and proposals for solutions. The feedback was enormous and shows the great interest in the topic: more than 8,000 responses were received by the ECB, and the first results have already been published. Accordingly, more than one in three of the participants demand a digital euro that protects the privacy of payment transactions. There is also a strong desire for security and a pan-European reach in a CBDC. It should therefore reflect the core characteristics of cash payments.

Decision by mid-year

Further results of the survey will follow in spring. On their basis and the results from the previous internal investigation phase, the ECB intends to make decisions by 2021 on the start of the digital euro project.

In an online interview on "Reuters Next," ECB President Christine Lagarde said she expects the digital euro to be introduced in the coming years, therefore, the new currency could soon be a reality.

Further information:

European Central Bank: Report on a digital euro, Brussels, October 2020

European Central Bank: ECB digital euro consultation ends with record level of public feedback, 13/01/2021

Author: Anja Kamping


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