Can a German lead the digital euro through the European Parliament? The EPP seems to think not.

BRUSSELS — The man leading the European Parliament’s work on the digital euro, who had become one of its fiercest critics, has stepped down to quell suspicions he was purposefully derailing the legislation.

Stefan Berger, who is part of fellow German Commission President Ursula von der Leyen’s center-right European People’s Party, said he didn't want the German center-right suspected of slowing down work on the sensitive file, which aims to implement a eurozone single digital currency.

“It's time for someone [who] is not coming from Germany and is not under suspicion that he wants to delay” the talks, Berger, a veteran Christian Democratic Union politician, told POLITICO while announcing his resignation.

Markus Ferber (another German), who is the center-right coordinator for economic files, will determine Berger’s replacement within the next week. Among the names being floated to fill the role is a former Spanish central banker Fernando Navarrete Rojas.

The digital euro is a virtual counterpart to euro coins and banknotes that the European Central Bank hopes will enhance domestic eurozone payments while unshackling the bloc from foreign providers such as Visa and Mastercard. The European Commission views the project as essential for fulfilling its strategic autonomy mission.

Awkwardly for von der Leyen, the stiffest resistance to the project has come from her homeland. Small German lenders, in particular, fear that the European Central Bank’s preferred design for a digital currency would suck savings out of their bank accounts, undermining their ability to raise funding.

But the idea is also unpopular with many German citizens, who are well known for going out of their way to use cash. Their long-running skepticism of digital payment systems, which they associate with surveillance and control, is sometimes seen as a historical hangover related to previous authoritarian abuse.

Germany, representing the country’s powerful and extended network of cooperative banks, is now leading a group of countries raising concerns about the digital euro’s design.

According to Berger, what banks fear most is that the digital euro could prompt customers to withdraw deposits very suddenly, sparking a destabilizing bank run on smaller lenders. “It’s no longer the money of the bank [after it is transferred],” Berger said, adding that the average deposit for a small German bank is about €3,000.

Berger became increasingly sympathetic to such concerns and admitted that, overall, he had become convinced central bank control over digital infrastructure should be limited.

He told POLITICO he wanted to put quality over speed of implementation to ensure such structural factors were accounted for, adding that the purely technological part of the file had been completed.

To mitigate such issues, Berger recently explored the possibility of tweaking the digital euro’s design, limiting it as a first step to a so-called wholesale model governing transactions between the central bank and the banking industry. He thought that could be a way to calm everyone’s fears.

“This was my idea, just reverse it, but the ECB … they don’t want [to], and the Commission said: ‘No, just make progress with this file,’” he said.

A rival group of European parliamentarians, unhappy with the progress of the file, asked Parliament coordinators even before Berger was reappointed to the role after this year's elections, to ensure the lawmaker in charge during the next term would be committed to making progress.

Socialists and Democrat, Renew and the Greens’ politicians specifically accused Berger of missing key deadlines and neglecting to organize meetings. His critics also claimed his actions, rather than accounting for the legitimate concerns of banks, were undermining the “democratic process.”

The ECB and the Commission are both keen to speed up the legislative process, with von der Leyen tasking new Economy Commissioner Valdis Dombrovskis with making “quick progress” on it.

Despite his own misgivings about the project, Berger agreed it was important for the reputation of the EPP to show a willingness to cooperate. “The way is now open for constructive and positive negotiation without suspicion,” he said. 

In response to news of Berger’s resignation, French Renew lawmaker Gilles Boyer said: “We should quickly resume our discussions.”

Ben Munster contributed to this report.