Do we need a Digital Euro?

Do we need a Digital Euro?

Many are unaware that when you open up your online banking app, the number displayed is what is owed to you from the bank, but it is still legal property of the bank. Only the physical notes and coins that you withdraw from your account and hold on your person, technically belong to you and are not attached to any particular debt from a bank. As digitalisation slowly spreads across every corner of our lives, and the likes of financial technology grow, it was only inevitable that the way we bank would also be affected. These days, not many of us keep a collection of physical cash, and instead we rely on financial technology when making the majority of our purchases.

Currencies that exist online are becoming increasingly more popular, with the international rapid rise of cryptocurrency and now the beginning of central bank digital currencies (CBDCs). In response to these emerging trends, January 2020 saw the European Central Bank (ECB) form a High-Level Task Force to explore the possibility of creating a central bank digital currency (CBDC) in the Euro Area, aka – a Digital Euro.

In this new digital era, digital currencies guarantee citizens access to simple, universally acceptable, and trusted means of payment. A digital Euro would also support the digitisation of the European economy and actively encourage innovation across retail payments, combining the efficiency of a digital payment instrument with the safety of central bank money.

What is the difference between a digital Euro and cryptocurrency?

The price of many cryptocurrencies is often volatile and fluctuates with the market. This makes it hard to use as a means of payment or as units in an account, and it means that many public institutions will not back them as such.

Central Bank Digital Currencies, such as the Digital Euro are developed to ensure that individuals are able to have the same level of confidence using it as they would with cash, as both are back by central banks. Essentially the digital Euro

  • will have legal value guaranteed by the European Central Bank
  • can be used alongside banknotes to make payments in the 19 countries in the Eurozone
  • will provide a fast, secure and innovative payment method
  • can be used by both businesses and private citizens

and in short, will give users an additional choice on how they choose to pay for things and make it easier to do so.

Why now?

This year (2021) reports showed that around 86% of central banks actively worked with and on CBDCs as they allow for increased financial inclusion. The European Central Bank previously stated that Europeans are increasingly relying more and more on digital payments, which lead to the initial investigation to the development of a transition into safe and effective cashless payment.

Cashless payment has been on the rise over the last couple of years, with financial technology such as Apple Pay and other contactless payment methods completely negating the need to even bring your wallet with you when going to the shops. Over the last year, with the pandemic, we have seen an even further acceleration into the decline of cash. The Digital Euro could, in theory, help to preserve access to and use of central bank money, even past the elimination of physical money.

Furthermore, several surveys have shown that by 2030 the internet will connect over 24 billion devices, which further serves the arguments to digitalize currency in order to preserve the efforts made to synchronise cash flows with the flow of services and pave the way to a new economy, expanding their financial footprint in the years to come.

In conclusion, the development of the Digital Euro will complement the existing fiat currency and give people more choices on how to make their purchases, and increase the Euro’s global financial inclusion.

How can Animo help?

Here at Animo, we are fortunate to have a large network of contacts who work within the modern banking institution and as such are able to provide valuable insights into the development of the financial sector and businesses’ best practice within this sector. If you have any queries about how the above-mentioned may affect your business, or any other relevant business queries, get in contact with one of our expert consultants today. Contact us today by calling us on +44 (0)207 060 0835, emailing us at, or by filling in a contact form below, and one of our consultants will be happy to advise you.