Digital euro and concerns of Germans – What will the future of payments bring?
The Future of Digital Euro Coming Soon?
The European Central Bank (ECB) is getting closer to making a decision regarding the introduction of a digital euro. According to the latest information, this decision could be made as soon as next year. This step could bring about significant changes in the area of finances and payments within the Eurozone countries.
Major Concerns of Germans Regarding the Digital Euro
Although the prospect of a digital euro sparks hope, not everyone is excited about it. About half of the German citizens claim that they cannot even imagine using a digital currency. The main reasons behind this reluctance are concerns about privacy and preferences linked to the traditional cash payment system.
Privacy Concerns in the Context of CBDC
Privacy concerns are one of the main reasons for resistance to the Central Bank Digital Currency (CBDC). An example can be seen in the USA, where the House of Representatives passed a bill in May that requires Congress approval for the issuance of a country-backed digital currency.
ECB Plans to Introduce Digital Euro in Card Form
The European Central Bank (ECB) not only intends to create a digital euro available on smartphones but also in the form of cards. This will allow users to access the digital currency even offline, which is a significant step towards facilitating digital payments.
Transaction Security and Encryption
The ECB plans to apply advanced data encryption technologies and cryptographic hashes to ensure the security of transactions and the protection of users’ privacy. This way, it aims to avoid linking specific transactions to users’ personal data in the digital euro system.
Bank of England’s Experiments with Digital Currencies
The Bank of England is also keeping up with experiments involving digital currencies. It is anticipated that new sets of tests on retail digital currencies will help better understand innovations in the payment sector and the associated risks.
Bank of England’s Focus on Payment Innovations
The Bank of England’s experiment program encompasses both wholesale CBDC (wCBDC) and a synchronization approach, analyzing the benefits of both strategies. The Bank of England emphasizes the need for swift engagement in innovations related to central bank digital currencies and proper preparedness for their implications on the current financial system.
Given the growing interest in digital currencies issued by central banks, effective management of transaction security and user privacy protection becomes crucial. Therefore, we expect that European countries and other nations will consistently monitor and adjust their financial strategies to the dynamically changing world of digital payments.
