A seemingly contradictory move by the German central bank highlights a quandary that central bankers all across Europe are facing. The Bundesbank is a staunch supporter of the European Central Bank’s plans to launch a digital euro. At the same time, it has started a lobby campaign to promote the use of cash.
In fact, both the push for cash and for the digital euro are — forgive the pun — two sides of the same coin. Central bankers all across the euro area are fighting a fraught battle to stay in control over the processing of payments, a mundane yet crucial part of the financial plumbing. Like electricity or water supply, most people will only notice its overarching importance once it is disrupted.
And central bankers do have good reasons to become nervous here. Their key leverage over payments in the soon-to-be 21 member states of the euro area — cash — is in secular decline. In 2024, coins and banknotes were only used in 52 per cent of transactions, compared with 72 per cent just five years earlier, ECB data shows. A whopping 12 per cent of companies refused accepting cash flat out last year, a threefold increase in just three years.