In a newly published paper, an association of more than 200 German banks is advocating for the establishment of a digital Euro. The association of what constitutes the most influential lobby group in Germany’s financial sector has published the paper.
What do they want?
According to the paper, the association said they are committed to making the digital Euro a reality. However, they acknowledge that to make their objective a reality, they will have to work with various partners across Europe. By working with various European partners, they hope to establish a Europe-wide payment system.
This effort comes just as China has made clear its plans to create a digital currency backed by its central bank. Besides that, there have been calls amongst US legislators for the US Federal Reserve, which is arguably the most powerful central bank on earth, to establish a digital currency.
The paper also mentions privately issued digital currencies. It takes special note of Facebook Libra, which it paints in a negative light. The paper does not have anything positive to say about coins such as Libra coin. It goes on to say coins such as Libra are not likely to happen. According to the paper, one of the main downsides to projects such as Libra is data protection. The association does not believe that private multinationals can be trusted to protect the private data of users. This paper is clearly pro-regulation. It expresses the view that there is a need for governments to act. However, it also recognizes that there is a need for innovation in this sector.
Similar Calls in Switzerland
Switzerland, which has traditionally been a neutral player in European geopolitics, also appears to be moving towards the creation of a digital currency backed by a central bank. A few weeks ago, reports indicated that Switzerland’s largest stock exchange and the nation‘s central bank would be working together to research a digital currency backed by a central bank.
Why Germany Matters
It is worth noting that Germany is the largest member of the Euro Zone in terms of economic size; it accounts for over a fifth of the EU’s GDP. As a result, any opinion that comes out of Germany’s financial sector is important. The nation has the power to make waves inside the Eurozone, which other nations might not be able to do. If Germany were ever to decide that a digital Euro was important for its future, it would quickly influence most of the world.
A Case for Stablecoins
The digital currency world is quite complex right now. A recent report by IBM indicates that small nations will be the most likely to start using digital currencies at the central bank level. However, this is not the case for more complex economies. An economy such as the US might not be as comfortable with digital currencies. This is because such coins could challenge the dominance of the US dollar in the financial market as the global reserve currency.
Image Source: Shutterstock