Germany’s Bundesbank says households ‘appear open’ to CBDCs

Nearly 90% of German households “appear open” to the idea of embracing a central bank digital currency during banking stress, Germany’s Bundesbank says.

A recent survey conducted by the Deutsche Bundesbank revealed that a very large majority of Germans “appear open” to the introduction of a central bank digital currency (CBDC) also known in the Europen Union as digital euro.

In a discussion paper, Germany’s central bank revealed the results of a survey, which gathered responses from approximately 6,000 participants, exploring how individuals would allocate funds in different scenarios, including “normal times” and periods of “banking stress.”

The survey found that many Germans are mainly open to CBDCs. Even without remuneration, almost half of the people said they would be okay with having digital euros. Surprisingly, they were just as interested in CBDCs as they were in using cash, even though Germans usually prefer cash, the central bank noted.

Moreover, the survey revealed a significant propensity among respondents to shift to digital euros during times of banking stress. Approximately 86% of respondents demonstrated their openness to CBDC, defined by either holding unremunerated CBDC or withdrawing to digital euros during banking stress.

Bundesbank’s study also suggests that correctly calibrated holding limits for CBDC could lead to “welfare improvements,” implying that limits would allow households to satisfy their demand for CBDC while mitigating the risk of runs during vulnerable periods.

Germany appears to be intensifying its focus on digitalization as a potential substitute for cash, as Deutsche Bundesbank president Joachim Nagel earlier reaffirmed Eurosystem’s inability to identify individuals through CBDC payments, highlighting minimal data visibility.

Speaking at the DZ Bank Capital Markets Conference 2024, Nagel emphasized that financial institutions and other payment service providers processing digital euro payments “would not be allowed to use personal and transaction-related data for commercial purposes.” He noted though that this restriction would only be lifted if users explicitly granted consent.