While the European Union was ahead of many of its peers in embracing the idea of a central bank digital currency (CBDC), Deutsche Bundesbank President Dr. Joachim Nagel says the digital euro is unlikely to be live before 2028-2029.
The digital euro “won’t be introduced anytime soon,” Dr. Nagel said during a Bundesbank speech titled “Central bank money in the 21st century.”
The president of Germany’s central bank highlighted the benefits of the euro CBDC, including safe, convenient, free payments, universal use within the eurozone, and being able to use it for payments of all kinds. Currently, German bank cards don’t always work in other eurozone areas, he said, giving an example of how a digital euro could improve things.
The central banker also emphasized the digital euro would offer a high level of privacy. That’s been a sticking point from the outset regarding CBDCs, but more on that momentarily.
Why no euro CBDC anytime soon?
Basically, it comes down to politics. A European CBDC needs approval from parliament, and while the first draft legislation was published in June 2023, it faced stiff opposition from conservatives.
After addressing some of the issues, mainly related to privacy, an amended draft was heard in February 2024. Even the European Committee on Civil Liberties and Justice (LIBE) tried to approve it, but the bill didn’t make it to the finish line before parliament recessed. In the EU, that means it will have to start again. 2025 is the earliest it’s likely to pass, and there will be design and testing stages after that.
Of course, soon is somewhat of a relative term. Opponents of CBDCs would argue that five years away isn’t very long at all, given the level of control they fear digital currencies may give central banks and governments.
Caution around CBDCs
It’s no surprise that a German central banker outlined the benefits of a digital euro, but there’s still much skepticism about them around the world. Attitudes vary widely from country to country, with people in developing nations having a more positive outlook as compared to those in the United States, the United Kingdom, Canada and Europe.
The main objection to CBDCs is the amount of power governments would have over citizens if they became ubiquitous. Being programmable by design, they would allow central banks to stipulate terms such as what they can be spent on, expiry dates, and perhaps even freezing and seizing them.
While control mechanisms around payments and money exist today, liberty advocates argue that CBDCs could lead to total tyranny. Furthermore, they may kill off many private payment providers, narrowing the number of options available and forcing more people into the CBDC dragnet.
Bitcoin is an alternative
While these fears are not unfounded, those concerned should take heart in the notion that an alternative scalable digital cash system exists. BSV allows for instant global peer-to-peer payments with near-zero fees.
All manner of transaction types are possible on BSV, including everything from simple cash transactions between peers to more complex ones tied to outcomes that trigger payment conditions in smart contracts.
While BSV is not anonymous, and criminals should not use it since all transactions are timestamped on the public ledger, it is private. Now that it scales to global dimensions, everyone from the U.S. to Nigeria to Papua New Guinea can use BSV for its original purpose: peer-to-peer electronic cash payments.
Of course, the ideal solution would be for central banks to issue CBDCs on a scalable public blockchain like BSV, allowing citizens to enjoy their touted benefits and limiting government control.
However, for now, very few understand that the BSV Blockchain can scale to the levels required to handle global payments, so CBDCs on it remain an unlikely scenario. Hopefully, with enough education and time, that can change.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: Finding ways to use CBDC outside of digital currencies
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