The European Central Bank is studying the issuance of a Europe-wide central bank digital currency (CBDC), the digital euro. However, not all Europeans are on board. Germany, in particular, has deep concerns about privacy, as most transactions there are still settled with cash, and citizens are reluctant to share personal data when making payments.
Cash is King: German Payment Habits
According to Bundesbank data, 51% of transactions in Germany are completed with cash, making it the most preferred payment method. Debit cards rank second with only 27%, while mobile payments account for just 6%. Bundesbank President Joachim Nagel has described this affinity for cash as “sacred.” In July, he stated: “The older generation — which I will soon be part of when I’m over 60 — is so digitally savvy these days that I honestly don’t really need to reach out to them anymore. They understand what’s happening.”
Privacy Concerns Undermine Digital Euro Adoption
A survey indicates that only half of Germans would be willing to use the digital euro, while the other half likely or definitely would not. Germans worry that payment data could be tracked, especially since cash offers full anonymity. The ECB plans to address these concerns by using encryption to make transactions unlinkable to users. Additionally, it intends to issue digital euro-linked cards to ease onboarding for less tech-savvy individuals.
Digital Euro Will Not Replace Cash
Nagel emphasized that the digital euro will be a complement, not a replacement, for cash. No final decision on issuance has been made; the ECB expects to conclude deliberations by the end of 2025. Until then, balancing German citizens’ privacy demands with the central bank's digitalization goals will be crucial for the digital euro's success.