Mr. Balz, is the ECB serious about the digital euro now?
We are in an analysis phase in the Eurosystem. A decision has not been made as to whether we will introduce a digital euro. But we do everything we can to understand all the potential effects and to be well prepared.
What is that anyway, a digital euro?
A form of digital money. So far there has been electronic money for consumers, which is kept in the checking accounts of banks. And there is central bank money in the form of cash. The digital euro could be a complement: digital central bank money that can also be used directly by consumers.
One of our readers said the other day that if they want to sell us a digital euro, they will soon also have digital bread. What does the consumer get from a digital euro?
For the consumer, security is the first priority with the digital euro. He’s got money straight from the central bank. In a crisis he wouldn’t have to worry about the stability of his digital euro. The central bank guarantees it directly. The digital euro could also promote digitization, promote innovations, for example for paying on the Internet of Things, and reduce costs. Depending on the design of the rules, this could mean that smaller transactions with the digital euro become cheaper for retailers and consumers.
How can you technically imagine the digital euro?
As I said: So far there has been no decision as to whether the digital euro will come at all, and also not about the technical design. Two variants in particular are being discussed: Either an account solution in which the digital euros are in central bank accounts. Or a wallet solution in which the digital euros are stored on the smartphone in a kind of wallet, an electronic purse. From there you could then use them to pay.
Does the digital euro have any similarities to Bitcoin? At least as a means of payment, they are seen by many as a deterrent example due to the strong exchange rate fluctuations …
No. Behind the digital euro are the monetary union and the central banks of the Eurosystem. This is the key difference to a private crypto asset like Bitcoin. The prices of these cryptoassets are very volatile, and this is also used by speculators. As with the normal euro, the ECB, on the other hand, would do everything it could to guarantee monetary stability.
As a consumer, how do I get the digital euro at all if it is issued by the central bank and not by my bank?
The central bank would issue the digital euro, but for the distribution of the digital euro there would probably be the option for consumers to exchange existing bank balances or cash for digital euros. It is easy to imagine that he does this through his bank or savings bank – just as he has received central bank money there in the form of cash.
What would the digital euro mean for Germany’s banks?
The digital euro could have far-reaching consequences for our financial system, mainly because it could be a substitute for bank deposits. That is why it is important, among other things, to keep an eye on financial stability in the plans. In times of crisis, the security of the digital euro in particular could lead to more uncertainty in the financial system for consumers.
Why – what happens in a crisis when citizens can choose between electronic bank money and central bank money?
The danger would be that many citizens would want to exchange their money at the banks for digital euros and possibly even in a relatively short time. That could endanger the stability of the financial system.
Can you solve that?