A.The European Central Bank (ECB) wants to decide on the digital euro this Wednesday. “We expect the ECB to give the go-ahead for a two-year design phase, followed by another three-year test phase,” said analyst Guido Zimmermann from Landesbank Baden-Württemberg (LBBW) on Monday when presenting a study to the new digital currency. “If the design is good, the Digi-Euro is certainly welcome,” concluded Zimmermann. The euro zone will face more currency competition in the future, as the economist Friedrich August von Hayek once described: “It would not be good if the euro zone became dependent on a Chinese e-yuan or an American digital dollar in the future.”
ECB President Christine Lagarde had made her support for the project clear in February and the decision of the ECB Council this week should – according to all that can be heard – be positive. Banks had recently expressed themselves differently. While the Deutsche Bank had warned in a research report of the failure of the digital currency, the citizens should see too few advantages in it, the banking umbrella association Deutsche Kreditwirtschaft had expressed itself overall quite positively.
“It will be exciting”
After all, the construction of the digital euro could pose a similar challenge as the introduction of the euro itself, said LBBW specialist Zimmermann: “It will be exciting.” IT experts know: “There is no such thing as software without bugs.” The difficulties recently with the Corona warning app in Germany made people cautious: “It didn’t necessarily go the way you would like it to with the digital euro”. With the digital currency, however, technical difficulties could even pose a risk to the reputation of the central bank.
“Initially, the digital euro will not change for the consumer,” said Zimmermann. “But in just a few years the number of digital currencies will increase and with their newly introduced capabilities change our image of means of payment and the lives of citizens more.” In Germany, with its relatively high proportion of cash payments, this is currently even more difficult to imagine than in Germany Countries like Estonia, Sweden or Norway: “I’ve been laughed at because I still wanted to pay with cash kroner in a restaurant in Sweden,” reports the bank analyst. In this country, Bitcoin is currently being criticized in the same way as the first cars were once – as “slow, dirty and immature”. The basic idea is “ingenious”.
“Simple variant” of digital money
The citizens should get the digital euro through the banks, says Zimmermann. The ECB is issuing the new digital currency, it will be real central bank money like cash. The banks, however, are likely to sell apps and digital wallets, it is not to be expected that all 450 million inhabitants of the euro zone will have an account with the ECB in the future. Citizens could then exchange money from their current account or cash through the bank for digital euros. Unlike electronic bank money on current accounts, this money is not at risk in the event of a bank failure. But so that not all people in countries like Greece or Italy withdraw their money from the banks and exchange it for digital euros in the future, the ECB has promised an upper limit per wallet. So far there is talk of 3000 euros; LBBW, however, considers this amount to be too high.
The ECB has not yet decided on the design of the digital euro. It is becoming apparent, however, that it will be a “simple variant”, said Zimmermann: “The ECB provides a knife with only one blade, not a multifunctional Swiss Army knife.” Apparently they don’t want to use a blockchain for the technology and instead want to use it Set up existing Italian real-time transfer system “Tips”. The speed of transfers with the digital euro will be high. Nevertheless, the ECB must be careful that the digital euro is not just something like “a second PayPal”. A programmability of the digital currency, which some in the industry and payment scene would have wished for, will probably not exist. Restrictions such as “This money must not be spent on gummy bears” or “This money must be used up by the end of the month” could not be attached to digital euro amounts.
“Convenience for the citizen should be decisive for acceptance,” said Zimmermann. In surveys, citizens primarily asked for anonymity, security and usability for the new digital currency. The analyst says, however, that there will be no complete anonymity of the payments: “Anyone who pays with cash at the bakery will also be seen by the baker, and even at E-Bay, people want proof that they have paid so that they can claim money back if necessary to be able to. “