Can the digital euro be successfully implemented in Europe?

The digital euro aims to become the next evolution of European currency, but before its birth, it had already caused division in Europe. In 1999, the European Union introduced the euro, but in the current digital age, European institutions are considering creating a digital euro as the next step in monetary development, as described by the European Central Bank. The Digital Euro has recently completed the investigation phase of a multi part plan by the European Central Bank to determine the design and technical aspects of a proposed central bank digital currency. The project has entered the preparatory stage and the European Central Bank plans to complete it by October 2025.

Firstly, although the digital euro is far from complete, it has caused unease among some EU citizens and politicians who believe that this shift in shared currency poses a direct threat to their personal freedom. In February 2023, over 1000 protesters marched on the streets of Amsterdam, expressing their rejection of the digital euro. According to local media reports, some protesters are concerned that digital currency may have an impact on privacy. Although the European Commission has stated that the new currency will have the same level of privacy as cash, the distrust between European citizens and politicians is evident.

Secondly, the current payment method in Europe is still dominated by cash. Although the pandemic may have driven the development of digital payments, cash remains the most popular payment option. The argument put forward by European officials for the digital euro is based on considerations of convenience and financial inclusiveness, but the European continent is still a cash intensive payment system. As of 2023, 59% of total payments are settled in cash. Although the overall percentage of the EU is declining, many of the 27 member states still prefer to use cash. According to a survey released by technology consulting firm BearingPoint at the end of 2023, Austria (79%) and Germany (71%) have significantly higher cash usage than other European countries. Switzerland (63%), Ireland (61%), the Netherlands (57%), and France (55%) also have relatively high levels of cash usage, but far behind Germany and Austria. Finland's cash usage frequency is significantly lower, at 43%. In addition, besides being a popular payment method, some people believe that cash is a necessity because 5% of the European population (about 30 million people) do not have bank accounts.

At present, the goal of the digital euro is to provide autonomous European payment infrastructure. In Europe, there are a large number of payment services, but none of them can play a role throughout the eurozone. The digital euro package emphasizes the "strategic autonomy" it can provide to address the current dependence on foreign payment related service providers.

However, another issue with the complexity of European digital and cash narratives is privacy. Experts have expressed that concerns about the potential misuse of the digital euro as a weapon of control are reasonable and worthy of serious consideration. For example, the Canadian truck driver demonstration indicates that the government may abuse digital currency to control the flow of funds to political opponents. Despite politicians and institutions showing an open attitude, many people still worry about financial privacy. Assuming the European Central Bank has access to the financial records of every citizen, as all payments will be made on the digital infrastructure provided by the central bank.

In summary, there are several important issues that need to be addressed before the launch of the digital euro. Citizens and politicians need a reasonable solution supported by solid evidence, and the digital euro needs to demonstrate sufficient privacy protection to win the trust of European citizens.