Balz: Digital euro complements cash, ensures payment choice
Burkhard Balz, Member of the Executive Board of the Deutsche Bundesbank, stated that cash and the digital euro are complementary forms of public money. He emphasized their shared goal of safe, efficient, and reliable payments amid changing habits.
Why Europe needs a digital payment option
Balz highlighted that the legislative work on a digital euro is part of the European Commission's Single Currency Package, which includes parallel proposals for the digital euro and for euro banknotes and coins.
The cash proposal reinforces the obligation to accept cash and ensures access, reflecting the Bundesbank's active support for cash as the physical core product of the central bank.
The digital euro is thus designed as a complement, not a replacement, for cash, addressing the absence of central bank money for everyday digital payments.
Balz noted changing payment habits, with cash transactions in Germany declining from 74 percent in 2017 to 51 percent in 2023.
The Eurosystem's rationale for a public digital option rests on three primary considerations: efficiency, resilience, and strategic autonomy.
Autonomy, resilience, and privacy by design
The digital euro's rationale centers on efficiency, resilience, and strategic autonomy.
Efficiency addresses Europe's fragmented digital payment landscape, which lacks a common instrument.
Resilience is built through offline functionality, enabling payments during network outages, as demonstrated by the April 2025 power cut in Spain and Portugal.
Strategic autonomy aims to reduce reliance on international card schemes, which process two-thirds of euro area card payments.
The digital euro would follow a two-tier structure: Eurosystem issues, banks distribute.
Design features include non-interest-bearing status with holding limits for financial stability, online/offline capabilities, and built-in privacy, preventing Eurosystem user identification.
A balanced future for public money
Balz's speech underscores the Eurosystem's pragmatic approach to digital currency, framing it as a vital complement rather than a threat to cash.
This dual strategy acknowledges evolving payment habits while reinforcing the foundational role of physical money.
The project's success hinges on navigating complex legislative processes and ensuring broad public acceptance, which remains a significant challenge.