The general public can hardly understand what the Bundesbank’s employees deal with every day. It’s all very technical and complicated, plus these technical terms. The Federal President is likely to feel the same way. It was therefore strategically wise that Bundesbank President Joachim Nagel informed his distinguished guest Frank-Walter Steinmeier (SPD) about the future of cash.
Everyone understands this topic, especially the Germans, for whom notes and coins are very important when paying. That is why there is criticism in many places of the ECB’s plans to introduce a digital euro. Is there even a threat of cash being abolished? “Of course not,” said Nagel. The ECB is currently developing new banknotes. “However, we don’t yet know what the new notes will look like,” Nagel added, whereupon Steinmeier, leaning casually on the standing desk, shouted: “You’re probably still painting.” This was followed by a courageous “Hua hua” about his own joke. The ice was broken.
Visits from high-ranking politicians are stressful for hosts. That was also the case at the Bundesbank. Steinmeier arrived on Friday at 10:20 a.m., but preparations had already been underway hours beforehand at the Bundesbank’s Innowerk. There, in Frankfurt’s Trianon skyscraper, 100 people are developing ideas for the future of the central bank. It’s a lot about artificial intelligence and its benefits for the monetary authorities’ business.
The development of the digital euro is part of the modernity of the new world of central banks. The main responsibility lies with the ECB, but the Bundesbank wants to get involved. Bundesbank President Nagel put the project at the top, created a new department and hired people for it. The benefits of digital cash for citizens are not easy to explain. Because people already pay digitally, via checking and credit cards. Steinmeier asked: “Why do we actually need the digital euro?”
Many citizens see their privacy at risk as a result of the digital euro
Firstly, processing should be safer and cheaper in the future than it is today. They also want to create a European payment system to reduce dependence on the world’s Paypals and Mastercards. Resilience is the big topic – also in relation to the USA. The ECB and the national central banks are in the development phase; digital cash could come in 2027. “We want to stay in the driver’s seat,” said Nagel, before admitting that Europe is lagging behind. “We are not the first,” said Nagel, referring to the digital rupee in India.
Many citizens also see their privacy at risk from the digital euro. “On the contrary. The payment data is more secure at the central bank than at other payment service providers,” said Nagel. Steinmeier looked up and gave the advice: “This needs to be made clearer in public.”