German banks call for digital euro

German banks call for digital euro

The Association of German Private Banks has presented a position paper advocating the establishment of a European digital currency and a common identity standard across the Eurozone.

The Association, which represents more than 200 private commercial banks and eleven member associations, says the arrival of Facebook's private cryptocurrency Libra raises serious questions about what the global monetary system will look like in the digital age and who will shape it in the future.

"There can be no question that responsibility for the monetary system lies, and will continue to lie, with sovereign national states," the paper posits. "Any currency provided either by banks or by other private companies must therefore fit into the state-determined system. Anything else would ultimately lead to chaos and instability."

To this end, the Association is calling for the creation of a crypto-based digital euro operating across a common pan-European payments platform.

For this to be achieved lawmakers and financial regulators must first lay the foundations for a level competitive playing field between sovereign entities, banks and private interests.

"The user of a digital euro - whether man or machine - must be clearly identifiable," the paper concludes. "This requires a European or, better still, a global identity standard. With every form of digital money, customers should be identified using a standard that is just as strict as that which banks and other obligated entities are required to apply under current legal framework pursuing the combat against money laundering and terrorist financing."

Comments: (5)

Dirk Kinvig
Dirk Kinvig - Finextra - London 31 October, 2019, 10:50Be the first to give this comment the thumbs up 0 likes

...and should that happen, how soon will it be before this scenario as reported back February plays out?

Eli Talmor
Eli Talmor - SentryCom Ltd. and IBC Foundation - Haifa 31 October, 2019, 11:13Be the first to give this comment the thumbs up 0 likes

"The user of a digital euro - whether man or machine - must be clearly identifiable," the paper concludes. "This requires a European or, better still, a global identity standard. With every form of digital money, customers should be identified using a standard that is just as strict as that which banks and other obligated entities are required to apply under current legal framework pursuing the combat against money laundering and terrorist financing."

The way to go is to bind the crypto-currency with identity!

Dinesh Katyal
Dinesh Katyal - Financial Data Exchange - San Francisco Bay Area 31 October, 2019, 13:251 like 1 like It is quite interesting to see the banks advocate for this since they are most likely to suffer if cryptocurrency becomes widely used. It will require them to evolve beyond just stores of money to new products
Philip Andreae
Philip Andreae - PA&A - Sea Island, Ga 31 October, 2019, 13:431 like 1 like

Reading of this hope for a Digital Currency, reminds me of the work various Banking associations,Europay, MasterCard and Visa did to design, develop, promote and pilot solutions based on the cryptography secured inside a Chip Card.  Products like Chip Knip, Chipper, Proton, Mondex, Visa Cash all delivered on this objective.  At that time Traceability and the need to create a ubiqutious infrastructure killed the dream. 

Now we seem to beleive the answer is a slow and expensive solution biult upon a cryptographic process called Block Chain which needs hardware to secure the fundamental secret.  Maybe we should look back and find solutions previously piloted, upgrade them and deploy in mobile phomes with Secure Elements "Enclaves" inside and NFC as a communication vehicle.

A Finextra member
A Finextra member 01 November, 2019, 08:02Be the first to give this comment the thumbs up 0 likes German commercial banks should get to know the plans of the Swedish central bank on digital SEK and see that the central bank could take over both the current account, savings account and also the entire payment business from the banks with the digital currency.
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