logo

Digital Euro politically motivated, says German central bank executive

phone dollar bitcoin
  • Decision to consult on a digital Euro ‘political’ according to Burkhard Balz
  • Fears that falling behind in the digital currency race will weaken Europe’s monetary policy measures

Throughout 2020, discussion of a central bank digital currency for the EU has been justified so far by the need for increased cashless transactions in the wake of the coronavirus pandemic. The European Central Bank (ECB) has so far given no further motivation for ramping up to launch a digital Euro. The ECB has emphasised that any digital currency would ‘complement cash, not replace it’. Burkhard Balz, a politician and member of the German central bank executive committee, however, has not toed this official line.

Speaking today, Balz made it very clear, ‘Introducing CBDC is a political decision rather than a technical decision’. He went on to say the societal impact of a digital Euro would need to be considered in light of alternatives.

Why is a digital Euro a ‘political decision’?

For the first time, Germany is expected to complete more card than cash transactions this year. 80% of central banks are now working on digital currencies. The fear is that more consumers using virtual currencies, like Bitcoin, poses a real challenge to how effective monetary policy can be. Wealth management economist, Frederik Ducrozet, recognises Facebook’s plan to launch virtual currency, Libra, has ‘accelerated central bank’s thinking’. Decreased use of Europe’s retail banks in favour of digital assets would also financially weaken the Eurozone.

Launching a digital Euro would be no mean feat. The ECB already has concerns regarding privacy and money-laundering. China and Russia have already stepped up their game when it comes to launching a digital currency, with the former currently piloting its digital yuan. The US has taken a more cautious tone, with Jay Powell yesterday denying any decision has been made on a digital currency, emphasising getting it right would be more important than being the first.

Europe’s three-month public consultation has begun, with a decision expected in mid-2021. Development of a digital Euro could take up a further four years. China certainly has a head start on the ECB here.

Sophia Atkinson

Sophia Atkinson

An enthusiastic writer and analyst, Sophia worked in data and media consultancy before joining Cryptopolitan. She enjoys finding the crypto stories that matter and bringing them to readers. Outside of writing, Sophia plays saxophone in a Cuban big band.

Related News

Hot Stories

Ripple price analysis: Price levels descend as XRP encounters bearish resistance at $0.5066
Kenyan Central Bank reiterates stance on crypto
Ethereum price analysis: ETH slowly peaks at $1,350 again, test of downside next? 
Neo price analysis: Bearish trend pulls NEO to $8.50 low
Is the demand for crypto as a payment method declining?

Follow Us

Industry News

Kenyan Central Bank reiterates stance on crypto
Is the demand for crypto as a payment method declining?
Why is the BoycottBinance hashtag trending today on Twitter?
Financial Empowerment through Bankless Systems
Weekly Crypto Price Analysis: BTC, ETH, SOL, XRP, and ADA