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Austrians Are Wary of a Digital Euro

Categories : Cash ensures competition among payment instruments, Cash is available to all users
August 2, 2022
Tags : Austria, CBDC, Central Bank, Survey
Almost half of the respondents surveyed by the Austrian central bank have no interest in a digital euro. Half of those who expressed interest stated that cash should retain its relevance.
Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

According to a 2021 Bank for International Settlements survey, 86% of the world’s central banks are actively researching the potential adoption of Central Bank Digital Currencies (CBDC); 60% were experimenting with the technology, and 14% were deploying pilot projects. The ECB appointed a dedicated task force in 2020 to conclude an investigation phase in October 2023. It will then decide whether to go ahead with the development phase.

Most central banks perceive their research on retail CBDC as highly strategic as it would enable universal access to central bank money in a future dominated by digital and private forms of money. The research has focused on the technology underpinning a CBDC and economic and legal aspects.

Consumers, by contrast, seem mostly unaware of these debates. The Österreichische Nationalbank (OENB), the central bank of Austria, has just published survey results on 2,006 Austrian residents, 16 and older. The OENB survey asked respondents about their demand for a “digital euro” in different use cases and their preferences towards crucial features of a retail CBDC, such as the access model (account vs. digital token), offline functionality, and person-to-person payments.

Respondents reported the perceived importance of attributes such as payment security, privacy, and data protection. The survey stated explicitly that a digital euro would be a complementary offer to cash and that one digital euro would have the same value as one euro in cash.

Key Learnings

Regarding the attributes of a CBDC, the respondents assign utmost importance to security and seem willing to compromise on privacy (assuming that physical cash will remain available). Many would opt for an account-based currency over the more anonymous digital tokens.

Do Central Banks Need to Rethink Their Neutrality Principle Towards Payment Instruments?

Overall, the authors conclude “that it is far from certain that the introduction of a digital euro will unconditionally lead to a widespread adoption.” The authors add, “Central banks are advised to embrace a more user-centric design of CBDC, which must include communicating the key concepts and benefits to the potential users.” However, this may require central banks to reconsider their traditional principle of neutrality and freedom of choice concerning payment instruments.

CBDCs also Face Skepticism in Germany and the United States

The OENB survey results are similar to those from a Deutsche Bundesbank survey from June 2021. “According to the survey, 77% of all respondents had not heard or read about a digital euro before. 56% of all households interviewed were, in their initial assessment, skeptical about introducing a digital euro in the future,” said Bundesbank Board Member Johannes Beermann.

In the United States, public opinion is overwhelmingly against a digital dollar, according to the Cato Institute, a libertarian think tank. The Federal Reserve released 2,052 public comments received before the end of May 2022. Most opinions were against the digital dollar (71%), and 21% were either neutral or unclear, compared with just over 12% in favor. According to the Cato Institute, the most ominous comments come from big finance, technology, and regulatory compliance companies, suggesting they are  “interested in securing a government contract on the looming project.” The main banking lobbies  are stridently opposed, with the American Banking Association (ABA) and Bank Policy Institute (BPI) saying, in the letter’s words, a digital dollar “could present serious risks to financial stability and may provide few if any, benefits.”

Contrary to popular belief, a U.S. CBDC is not necessary to “digitize the dollar,” as the dollar is largely digital today. However, the issuance of a CBDC would fundamentally rewire our banking and financial system by changing the relationship between citizens and the Federal Reserve. – American Bankers Association

This post is also available in: Spanish