Burkhard Balz: Cash and the Digital Euro – Complementary Forms of Public Money

Why It Matters

The digital euro would give Europe a sovereign, resilient digital payment option, reducing reliance on non‑European card schemes and strengthening the overall payment infrastructure.

Key Takeaways

• Cash usage in Germany fell to 51% in 2023
• Digital euro targets efficiency, resilience, strategic autonomy
• Offline capability ensures payments during network outages
• Pilot phase scheduled for second half of 2027
• Rollout could begin in 2029 pending legislation

Pulse Analysis

The rapid decline of cash in Germany – from 74% of transactions in 2017 to just 51% today – reflects a broader European shift toward digital payments. While the trend raises concerns about the future of physical money, Bundesbank officials argue that cash will remain the physical anchor of the monetary system. By pairing cash with a digital euro, policymakers aim to preserve choice for consumers and businesses while addressing the growing demand for fast, secure electronic transactions.

A digital euro is designed as a public, interest‑free payment instrument that complements existing cash. Its three core design pillars – efficiency, resilience and strategic autonomy – tackle persistent gaps in Europe’s payment landscape. The offline feature would let merchants complete transactions without internet connectivity, a capability highlighted by the 2025 power outage in Spain and Portugal. Privacy is baked in, with the Eurosystem unable to trace individual purchases, and holding limits are set to protect financial stability. Together, these attributes promise a pan‑Eurozone solution that rivals private card schemes.

Legislative progress is now the decisive factor. The European Commission’s proposal debuted in June 2023, the Council adopted a negotiating mandate in December 2025, and the European Parliament is close to finalizing its position. Technical readiness began in November 2025, and a pilot with selected providers is planned for the second half of 2027. If the regulatory framework is approved, a full rollout could commence in 2029, offering Europe a sovereign digital payment option and reducing dependence on external card networks.