The digital euro has reached political domain. After a public hearing in the plenary of the German Bundestag (Parliament) end of last week, now also the finance experts of the Bundestag deal with the topic of the digital euro. The Finance Committee of the German Bundestag recently conducted a two-hour session open to the public, where financial specialists from various political parties engaged in dialogue with a diverse group of external experts on the subject of the digital euro. External experts were e.g. from Bundesbank, the domestic banking industry, academia, and, think tanks. It was a great opportunity for our Digital Euro Association (DEA) to contribute as an expert and I had the great pleasure to represent DEA.
From the discussion, several crucial insights emerged:
- Perspective: The notion of a digital euro has not yet created excitement for most parties, with many parties still formulating their stance. It was pointed out that a deeper, more nuanced grasp, especially of the technological dimensions, is crucial for a well-rounded assessment of the digital euro.
- Privacy: The question of the benefit for the citizens was raised a couple of times. Privacy surfaced as a primary selling point for the digital euro, promising to enrich the digital transactions domain. In the hearing, I particularly stressed that the digital euro needs to provide not „promised privacy“, but „technical guaranteed“ privacy. There must not be the necessity to trust specific stakeholders for indeed providing and preserving privacy. Fortunately, there are various technological solutions to provide this.
- Transparency through Open-Source: Unexpectedly, the subject of open-source transparency was discussed in not one but three distinct inquiries. The establishment of trust, a pivotal factor in driving user adoption, was questioned. A definitive route to accomplishing this lies in the open-sourcing of the underlying code. This notion, somewhat uncharted for central banks, can take cues from the world of cryptocurrencies, such as Bitcoin. A fusion of open-source methodologies, assured privacy, and relatively high limits for private transactions could elevate trust and facilitate wider acceptance.
- Private sector engagement: The DEA, as I conveyed in response to a question, regards partnerships as pivotal. The anticipated payment ecosystem of the future is likely to integrate Central Bank Digital Currencies (CBDCs) alongside traditional cash and other payment instruments, as well as novel private-sector entities, such as MiCA-compliant stablecoins in Europe. Regrettably, the topic of stablecoins, despite their critical and expanding influence on the payment environment, received minimal attention, with only one query touching upon their role. Bitcoin was notably absent from the discussion.