Bundesbank backs digital euro to cut reliance on foreign payment systems
The Bundesbank has reaffirmed its support for storing Germany's gold reserves abroad, ensuring quick access in major financial centres. At the same time, the bank is pushing for progress on the digital euro, which it views as a key step toward reducing Europe's reliance on foreign payment providers. A political decision on the project is expected before the end of the year.
Burkhard Balz, a member of the Bundesbank's executive board, described the digital euro as a 'digital twin of physical money' rather than a replacement for cash. The initiative aims to boost financial resilience by offering a European alternative to dominant U.S. payment systems. Europe currently depends heavily on these providers, as private sector efforts have yet to deliver a unified pan-European solution.
The ECB plans to launch a digital euro pilot in late 2027, with provider selection beginning in 2026. While no individual European countries outside the Eurosystem have introduced their own digital currencies, existing private systems like Wero (used in France, Germany, and Belgium) and Bizum (in Spain) show growing demand for digital payment options. On gold reserves, Balz defended the practice of storing them in key trading hubs such as New York and London. He declined to discuss audit procedures, citing confidentiality agreements with the central banks holding the reserves.
The Bundesbank's stance highlights two priorities: maintaining secure access to gold reserves and advancing the digital euro as a strategic move. If approved this year, the project could reduce Europe's dependence on non-European payment networks. The pilot phase, set for 2027, will mark the next step in testing its feasibility.
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