Pressure is mounting on the European Central Bank’s (ECB) plans to launch a digital Euro by 2029, as key German banking associations voice serious concerns about the institution’s suitability to spearhead such a transformative project. While acknowledging the potential of a digital currency, representatives from the Deutschen Sparkassen- und Giroverbandes (DSGV) and the Bundesverbands der Deutschen Volksbanken und Raiffeisenbanken (BVR) are questioning whether the ECB, traditionally a regulatory body, possesses the necessary market acumen and competitive experience to develop a customer-centric payment system.
The digital Euro recently entered a new phase of development following a two-year preparation period. However, the criticisms are intensifying, with DSGV board member Joachim Schmalzl publicly stating that the ECB appears to be overestimating its capacity to deliver a viable product. He argued that a centralized, bureaucratic approach, as embodied by the ECB’s undertaking, is unlikely to succeed, citing a lack of direct customer engagement and market experience. “When a European administrative authority like the ECB says, ‘I’ll do this for you and solve it,’ that’s not the most promising variant from our point of view” Schmalzl stated, highlighting the inherent disconnect between a regulatory institution and a consumer-facing service.
The banking associations advocate for a more collaborative model, pushing for private sector involvement in the operational design and implementation of the digital Euro. BVR board member Tanja Müller-Ziegler emphasized that payment systems are fundamentally about cooperation and stressed the vital role of integrating existing banking infrastructure. She argued that a digital Euro intrinsically linked to bank accounts could contribute to European sovereignty, a goal undermined by the ECB operating a second, parallel payment infrastructure.
Despite concerns, the associations firmly rejected suggestions that a digital Euro would inevitably lead to a phasing out of physical cash. Drawing attention to the extensive network of ATMs and branches maintained by Sparkassen and Volksbanken, Schmalzl asserted a commitment to preserving cash usage and safeguarding consumer choice.
However, the associations are also critical of the communication strategies employed by proponents of the digital Euro. Recent reports have surfaced alleging that dissenting voices have been unfairly characterized as opponents of European integration on the professional networking platform LinkedIn. “What arguments can I present when I’m being asked to defend ‘authority over the market’?” Müller-Ziegler questioned, underscoring the perception of a biased narrative.
Beyond the immediate operational concerns, fundamental questions of regulatory oversight remain unresolved. The banking associations warn that the inherent conflict of interest – the ECB simultaneously acting as a supervisor of banks and payment systems, while also becoming a payment provider – creates an untenable situation. “The referee shouldn’t be playing the game” Schmalzl cautioned. They are demanding a rigorously defined role for the ECB, strictly limited to facilitating the digital currency, along with robust democratic controls over any future advancements.
Furthermore, the core utility of the digital Euro itself is being called into doubt. Müller-Ziegler bluntly assessed that, in its current design, the digital Euro addresses no specific problem, suggesting that value would only be derived from an offline functionality enabling transactions even during system failures.
