Key Takeaways

• Privacy concerns are the main barrier to digital euro adoption in Germany.
• ECB plans to introduce the digital euro with enhanced security features and offline capabilities.

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In Germany, skepticism toward the digital euro is mounting as the European Central Bank (ECB) approaches a decision on its implementation, slated for late 2025. A new report from Bloomberg reveals that Germans, especially older generations, are still worried about the security and privacy of the digital euro.Apart from concerns about data being tracked, and potentially misused, Germany’s long-held preference for cash also contributes to its deep-seated resistance to digital financial solutions.The ECB plans to address these concerns by adopting advanced security measures such as data encryption and offering digital currency on cards for offline use.According to ECB President Christine Lagarde, the ECB wants the digital euro to coexist with physical cash, not replace it. The goal is to include everyone, even those less comfortable with new technology.There’s a generational gap in comfort levels with digital transactions, the report noted. Young Germans are more open to the idea of a digital euro. However, Joachim Nagel, President of the Deutsche Bundesbank, believes Germans can be convinced about the availability of cash use.Nagel also noted that the older population is becoming more tech-savvy and that they acknowledge the need to adapt to new developments.Besides Germany, many countries like Austria and Slovakia also prefer cash to digital payments. Meanwhile, others like the Netherlands have embraced them.Evelien Witlox, director of the digital euro project, said the ECB is actively considering issuing a digital euro, but “it is not inevitable at the moment.” The main motivation for the digital euro is to decrease Europe’s reliance on non-European payment services.If adopted, the digital euro would become legal tender, which means businesses accepting digital payments would have to accept it, said Witlox.US lawmakers push backAccording to data from the Atlantic Council, around 134 countries are exploring a central bank digital currency (CBDC). A number of nations, including China, Russia, and Brazil, have moved to the pilot stage.The US is currently in the research and exploratory stages of developing a digital dollar. Federal Reserve (Fed) Chairman Jerome Powell, however, stated the central bank had no plans to create one.

“In terms of a CBDC, there’s really nothing new going on,” Powell said during a Federal Open Markets Committee meeting last month. “There’s not much going on at all.”

Like Germans, Americans are unlikely to favor the central bank-backed virtual currency. Opposition is growing among plenty of political figures and groups due to concerns about government surveillance of citizens’ financial activities.In September last year, Congressman Tom Emmer introduced the CBDC Anti-Surveillance State Act in a bid to block the Fed from issuing a retail CBDC. It was passed by the House of Representatives in May and is now awaiting a Senate vote.A companion bill was introduced by a group of five senators, including Ted Cruz, Bill Hagerty, Rick Scott, Ted Budd, and Mike Braun, in February this year. The bill also aims to prohibit the Fed from creating a CBDC directly for individuals, indirectly through intermediaries, or using it to implement monetary policy.US presidential candidate Donald Trump has publicly opposed the idea of a CBDC. He said at the Bitcoin 2024 conference in Nashville that he would never allow its formation under his administration.

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