Burkhard Balz: Foundations of resilience - the role of cash and the digital euro
Burkhard Balz (Bundesbank) highlights the foundational role of cash and the digital euro in maintaining monetary resilience; the speech does not directly address FX markets, but the broader central-bank digital currency (CBDC) narrative carries implications for euro liquidity and cross‑border payment efficiency.
What the desk is arguing
Balz underscores the dual‑track strategy of preserving cash as a public good while advancing the digital euro to future‑proof the euro area’s monetary system. The speech reinforces the Bundesbank’s cautious, resilience‑focused approach to CBDC, with no direct FX guidance but an implicit support for euro stability.
Where it sits in our coverage
Our consensus remains constructive on EUR over the medium term (firm spread 1.05–1.15 vs. USD). This speech aligns with our view that structural reforms and digital‑currency progress underpin euro area credibility, though near‑term ECB policy divergence caps upside.
How other firms see it
- goldmansachs: 'Neutral on EUR/USD; see limited FX impact from CBDC in 2026.' - jpmorgan: 'Positive on EUR long term; digital euro enhances payment system resilience.'
How firms align with this view
Key takeaways
- 01Cash and digital euro are complementary pillars for monetary resilience, per Balz.
- 02No direct FX market signal, but the speech supports euro area institutional credibility.
- 03Central-bank digital currency narrative remains a slow‑burn theme for EUR demand.
Market implications
Minimal immediate FX impact; marginally supportive for EUR as it reinforces the euro area’s commitment to a modern, resilient payment infrastructure. Longer‑term, a fully operational digital euro could lower transaction costs and boost EUR internationalisation, but this is years away.
Risks to this view
If the digital euro rollout faces significant political or technical delays, the credibility boost to EUR may dissipate. Conversely, too rapid a transition could disrupt bank funding models and create short‑term FX volatility.
Sources & References
How we cover this story