The conversation around digital currency might have cooled significantly from its pre-pandemic zenith, but the European Union is still pushing ahead with the planned launch of its ‘Digital Euro’. A report from BearingPoint suggests that the move might be taken up by some users in even the most cash-centric economies on the continent, concerns around trust mean it will likely remain a minority interest.
Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Like any currency, cryptocoins are only worth what investors are prepared to believe they are worth – but the amount of belief invested in these mechanisms is surging on all fronts at present.
The market hype around cryptocurrency peaked dramatically at the turn of the decade – just as many government organisations were finally catching up to the trend. As a result, the European Central Bank first announced plans for a Digital Euro in mid-2021 – months after the beginning of a sustained crash in the crypto-market that persisted ever since.
In spite of this, the slow-moving mechanisms of the EU seem determined to push ahead with the plans for their own digital currency. According to its proponents, the advantages of the Digital Euro over other forms of digital payment would be clear – it would be equivalent to the Euro in its cash form, and so it is asserted it would be vastly more stable than any cryptocurrencies – though this is a low bar to clear – while users would be able to pay at stores and transfer money to other users using a wallet app completely free of charge, unlike many commercial banking apps.
According to new research from BearingPoint, this is the primary selling point of the Digital Euro to European consumers. When asked what criteria would encourage them most to adopt the new currency, 45% of some 8,000 respondents cited it being free of charge. This was ahead of it being accepted ‘everywhere’, online or offline, at 37% – though generally, debit and credit cards with ‘non-digital’ Euros loaded onto them are also accepted across the EU nations that have adopted the currency.
BearingPoint also found that even in the most cash-centric economies of the Eurozone, there would be some interest in a Digital Euro. For example, just under 10% of German respondents said they would use a Digital Euro daily, while that number rose beyond 40% when taking into account those who would use it at least once a month. The Netherlands, Ireland and Austria recorded similar levels of interest.
However, in no economy did a majority of consumers say for sure that they would use a Digital Euro at all. In Germany, close to 60% said they either did not know, or would never use the currency – while that rose to almost 70% – the majority of whom were in the ‘never’ camp.
This highlights the significant challenges relating to a Digital Euro which are still to be addressed. Most importantly, who should be trusted with the data pertaining to Digital Euro transactions. Just 30% of respondents currently said that they would use the Digital Euro because they trusted its data security.
In particular, they seem concerned that corporations and political actors might be able to follow their actions more closely with the Digital Euro. When asked who should actually be entrusted with the data relating to Digital Euro use, only 16% agreed to the ECB, while only 4% felt technology companies like Apple or Google could be trusted. The largest portion meanwhile opted for “none of the mentioned” options.
