Germany’s Central Bank Stresses Need for Digital Euro

Burkhard Balz, a member of the executive board of Germany’s central bank, has emphasized the importance of the digital euro in safeguarding Europe’s financial autonomy. In an interview with Süddeutsche Zeitung, Balz outlined the initiative’s critical role in bolstering Europe’s resilience in a digitalized and globally competitive environment.

Balz explained that the digital euro would operate like book money, existing in digital form while remaining interchangeable with physical cash. He assured that cash will not be abolished, stating:

“As long as people want to have cash, people will be able to pay with cash and have access to cash.”

Reducing Dependence on Non-European Payment Systems

Balz voiced concerns over Europe’s dependence on non-European payment providers like Mastercard and Paypal, stressing the need to build an independent payment infrastructure.

“Dealing with the USA and China is going to be rough. We need to buckle up,” he warned, pointing to the risks of relying on external systems for European financial transactions.

Competitive Pressures from China’s CBDC

China’s strides in developing its central bank digital currency (CBDC) further underscore the urgency of Europe’s efforts. Balz noted:

“The Chinese are among the most advanced in the world in terms of developing their own central bank digital currency. They could introduce the digital currency, but currently have problems with the financial stability of the system and economic development.”

While China’s progress is significant, Balz highlighted its current challenges, presenting an opportunity for Europe to assert its leadership in the digital currency space.

Preserving Sovereignty in Payments

Balz also referenced instances where Chinese payment platforms like Alipay were used at public events in Germany, cautioning that such reliance could grow without European alternatives.

“We basically have to represent our positions and interests very clearly,” he asserted, stressing the importance of advancing the digital euro to ensure Europe’s sovereignty in the payments landscape.

He criticized the lack of private sector innovation in this area over the past three decades, which has necessitated central bank intervention. The digital euro is not about replacing cash but about creating a resilient and autonomous European payment system capable of withstanding global pressures.

Balz’s comments highlight the strategic importance of the digital euro in reducing Europe’s reliance on non-European payment systems and asserting its independence in the global financial ecosystem. With growing competition from global players like China, advancing the digital euro has become critical for protecting Europe’s sovereignty in the evolving payments landscape.