Cyprus can tap, but can it trust the digital euro?

Most people in Cyprus know little about the digital euro and fewer than four in ten are ready to use it, with fears over the monitoring of transactions and the future of cash dominating public concern. Maria Kontou said in a blog published by the Central Bank of Cyprus (CBC) that 61 per cent of those surveyed had no knowledge of the digital euro, while just 1 per cent considered themselves fully informed. Kontou explained that digital payments had developed rapidly over the past decade, both globally and across Europe, including Cyprus, with many everyday transactions now carried out through electronic wallets and mobile applications, online and in physical shops. As this shift gathers pace, she said the European Central Bank (ECB) was developing the digital euro as “a digital form of money” that would be issued by the ECB and made available to everyone in the euro area for payments with and without an internet connection. Work is continuing on the legal framework governing its issuance and operation, as well as the technical system needed to introduce it, Kontou said, adding that its first launch is currently targeted for 2029. To find out how much Cypriots know about the project, Kontou said the CBC conducted its first quantitative survey on public awareness of the digital euro. The survey took place between April 21 and 27 through telephone interviews, using a structured questionnaire prepared by the CBC’s Payments Supervision Directorate. Kontou added that the research covered the whole of Cyprus and included 506 people aged 18 and above. Although cash remains the island’s most widely used payment method, Kontou said 63 per cent of respondents used credit and debit cards in physical shops every week. A further 23 per cent made online payments and money transfers through internet banking and mobile applications on a weekly basis. Among people paying by card through their mobile phones, 40 per cent used the method weekly, while Kontou noted that cheque use had become “very limited”. The continued attachment to cash is not unique to Cyprus. Referring to the ECB’s 2024 study on consumer payment attitudes, Kontou said cash still accounted for 52 per cent of small payments in physical shops across the euro area and remained widely used for payments between individuals. She added that 62 per cent of European consumers considered the ability to pay with cash “very important”. However, the Cyprus survey exposed a clear divide between people who rely on cash and those who have moved towards digital payments. Kontou said daily cash users tended to have more limited access to digital services and were mainly older men with lower educational and income levels, as well as pensioners and unemployed people. Those preferring digital payment methods, including internet banking, mobile banking and card payments through mobile phones, were mainly women below 45, according to Kontou. She said they generally had tertiary education, belonged to middle and higher-income groups and lived in urban areas. Meanwhile, Kontou described those favouring a combination of physical cards and cash as mainly middle-income women living in urban areas. Cheque use, she added, was found primarily among older men and businesspeople. Despite the growing use of digital payments, public knowledge of the digital euro remains low. Kontou said the largest share of those with at least some understanding of it consisted of people below 65, university graduates and those in employment. Among people who had simply heard about the digital euro, Kontou said the typical respondent was male, older, university-educated and from a higher-income group. They generally lived in urban areas and worked in business, were self-employed and held managerial positions. Social media emerged as the leading source of information, used by 49 per cent of those familiar with the digital euro, while 30 per cent had heard about it through television programmes. Kontou said conferences and seminars were the least popular way of learning about the project. Younger people, employees, those from middle and lower-income groups and people living in rural areas tended to rely on social media, Kontou said. Television was more widely used by older people, lower-income groups, those with less education and unemployed people. By contrast, Kontou said higher-income groups, university graduates, urban residents, businesspeople, the self-employed and managers preferred printed and online newspapers. When respondents were asked whether they would use the digital euro, 35 per cent said they were willing to make it part of their daily lives. Kontou said these people were mainly below 45, employed, university-educated and from higher-income groups. At the other end of the scale, 28 per cent considered it somewhat unlikely to very unlikely that they would adopt it. Among those prepared to use the digital euro, 41 per cent would use it for purchases in shops and 40 per cent for online shopping, Kontou said. A further 33 per cent would use it for payments between individuals, while 17 per cent remained unsure about the kind of transactions they would carry out with it. However, most people were unconvinced that the digital euro would offer anything substantially different from the payment methods already available. Kontou said just 19 per cent believed it would provide a genuinely different way of completing transactions. Those holding this view were mainly men, people below 25 and respondents who already had some knowledge of the project. Meanwhile, 56 per cent did not believe the digital euro would offer anything “truly different” from existing payment methods, she added. Privacy and the possible disappearance of cash were the biggest concerns. Kontou said 53 per cent of respondents were worried that their transactions could be monitored and feared that the introduction of the digital euro could eventually lead to cash being abolished. Security worried 38 per cent, while 25 per cent were concerned about how they would manage their spending through the digital currency. Ease of use caused less anxiety, with Kontou saying that only 30 per cent expressed serious concerns on this point. Those with the strongest reservations were mainly women, older people, lower-income groups and people without tertiary education, according to Kontou. The same group also included unemployed people and respondents with no prior knowledge of the digital euro. Businesses, however, appeared more open to the new payment method. Among the business owners, managers and self-employed people who participated, 54 per cent said they would accept digital-euro payments without any reservations. For another 9 per cent, Kontou said the decision would depend on the cost, ease of implementation and customer demand. Meanwhile, 27 per cent said they would not be willing to accept payments in digital euro. As the European project progresses, Kontou said the CBC would continue informing the public through digital and printed media, together with conferences and seminars. The text was reviewed and finalised by Stelios Georgakis, general director of the CBC’s Payments Supervision Directorate. The blog states that the views expressed belong to the author and do not necessarily represent those of the CBC.