ZEW survey: Large majority of companies consider the ECB's digital euro to be unnecessary

With the digital euro, the European Central Bank (ECB) is also testing innovations for companies. However, the project is not well received by many companies. Most consider a new digital means of payment to be superfluous. This is evident from the results of a survey in several industries, which were made available to the Handelsblatt in advance.

The Mannheim Centre for European Economic Research (ZEW) repeatedly surveyed companies from industry and the information economy about the digital euro, which the ECB wants to introduce in three years. According to this, most entrepreneurs know the plans. However, few consider the digital euro a blessing. Only seven percent of those surveyed expect positive effects.

Most see no added value: 77 percent of companies expect no impact at all. 17 percent are negatively disposed. However, the survey does not reveal the concerns in more detail. "The ECB should try to highlight the advantages for companies more clearly," said Vincent Rost, author of the study. "So far, the ECB has not been able to convince companies of the positive effects and infect them with their enthusiasm."

Joachim Wuermeling, former member of the Executive Board of the German Federal Bank, sees it differently: The ZEW survey is a wake-up call for entrepreneurs, said Wuermeling, who advises companies on the digital euro. "It is up to the companies themselves, not the ECB, to derive the greatest benefit from the digital euro," he warned.

The ECB has been working on introducing the digital euro for six years. In Brussels, the final negotiations are underway on an EU law that will oblige traders to accept the digital euro. Meanwhile, the ECB is preparing a pilot phase with selected banks that will issue the digital euro to their customers. In addition to a everyday variant for everyone, the ECB is allowing companies from various industries to test new payment options.

For example, the digital euro is supposed to enable them to automatically pay business partners as soon as a service has been provided or an item has been delivered. According to the ZEW, 800 companies from the manufacturing sector and various branches of the information economy took part in the survey: information and communication technology, media and knowledge-intensive service providers.

Many questions about the digital euro are still open ZEW expert Rost explains their restraint by saying "that many questions around the digital euro are still open". Many companies apparently see it as just another payment option among many without additional benefits. As long as this is the case, companies will hardly be enthusiastic about the digital euro.

Companies have apparently not yet recognised the innovation potential, said Wuermeling, who researches the digital euro at ESMT Berlin. Automated payments could significantly reduce business risk and thus enable transactions with unknown customers. Faster, safer and cheaper payments, avoiding delayed or defaulted payments and lower administrative costs in business transactions could further improve their competitiveness.

According to the ZEW, almost 60 percent of companies are aware of the ECB's plans for the digital euro. This is five percentage points more than in the same survey two years ago. Large companies with at least 100 employees report knowing the plans slightly more often than smaller businesses. Need for action in retail greater than in industry An ECB spokeswoman described herself as "encouraged by the growing awareness of the digital euro in the economy".

Market participants had shaped and tested the digital euro from the start, and there was great interest in the upcoming pilot project, she said. The digital euro will provide the economy with a common European infrastructure that it can use free of charge to develop new products and services with reach across the entire euro area.

"European players can thereby expand more easily in the internal market and compete on a European scale," said the spokeswoman. According to the ZEW survey, almost a third of the companies surveyed expect to have to make adjustments as a result of the digital euro. This is less than in the first survey at the beginning of 2024 (40 percent).

The pressure to act may be greater in retail. Traders will not be allowed to refuse to accept the digital euro. Many may have to upgrade their payment systems as a result. Nevertheless, trade associations welcome the digital euro. They expect lower fees compared to a market that continues to be dominated by US payment providers.

However, the German Retail Association HDE fears that EU lawmakers and the ECB will squander this "rare opportunity" with concessions to the banking industry.