Burkhard Balz, the head of the German Bundesbank, considers the introduction of the digital euro and a European payment system a crucial strategic project to make Europe independent in the payment sector from the US and China.
“It’s about autonomy, resilience, and efficiency. We should no longer rely on US providers like PayPal and Mastercard in the future” Balz told the Süddeutsche Zeitung.
“Of course, the US is a friendly state, but Europe still has the risk that data may be stored in the US. The decision to disconnect a payment system as a last resort lies outside of Europe. We don’t need to make ourselves believe otherwise” said Balz, who also sees China as a competitor.
“We’ve seen an example of this during the European Football Championship in Germany. On some fan zones, such as in Frankfurt, you could only pay with Alipay or in cash” said Balz. “Dealing with the US and China will get rough. We need to buckle up” said Balz, who is responsible for the digital euro project in the Bundesbank’s executive board.
By the end of the year, the ECB and the EU aim to have clarified the fundamental questions about the digital euro, with the introduction expected by 2030. This will be accompanied by the establishment of a European payment system. Balz rejects the fear in some parts of the population that the project will mark the end of cash: “We don’t want to abolish cash in any way. We’re just introducing the third series of banknotes, which will be launched in 2029. You wouldn’t do that if you had any plans to abolish cash” said Balz.
“We stand by cash, we want to continue to promote cash, and we want to offer people a choice. Whenever people want to pay with cash, it should be possible” said Balz.
The former EU parliamentarian estimates the costs of the project at around 1.2 billion euros. “This will only be a part of the costs, and there will be additional costs for the infrastructure for processing payments with the digital euro, which cannot be estimated yet” said Balz.
Balz considers cryptocurrencies unsuitable for processing mass transactions. “Today, the Bitcoin network processes around 500,000 transactions worldwide. Alone in Germany, we have an average of nearly 80 million non-cash transactions per day. I think that says it all” said the Bundesbank head.