Association of German Banks Debate Over A ‘Programmable’ Digital Euro

In its latest position paper released on Wednesday, October 30, the Association of German Banks has put forward several arguments with respect to the launch of Digital Euro.

The Association that represents over 200 private banks across Europe has mentioned that the economy need a “programmable” Digital Euro. Currently, major economies like the U.S. and China are working on having their native digital currencies representing their national currencies.

It seems the EU is also considering a similar digital asset to tokenize the Euro. However, the paper notes that the currency issued by private banks or companies should fall in the ambit of the monetary policies of the sovereign nation states.

While addressing the matter about issuing a cryptography-based digital euro, the Association of German Banks has there is a simultaneous need of creating a common, pan European payments platform.

The paper mentions: “The user of a digital euro – whether man or machine – must be clearly identifiable. 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 association further argues that to have a robust and competitive payment system pan Europe, it must adapt to a common currency and common standard. “In order to maintain Europe’s competitiveness, satisfy customers’ needs and reduce transaction costs, the introduction of euro-based, programmable digital money should be considered,” said the Association.

The private banks of Germany very well know that digitization is the way to move forward. However, it was to remain cautious simultaneously making sure that the existing monetary system is not endangered at the same time.

The private banks said that not only European, but other global banks and international financial organizations should act responsibly and make sure that there isn’t any competition with sovereign currency from private institutions or companies.

ECB President Mario Draghi recently warned that private stablecoins bring little value. He added: “Thus far, stablecoins and crypto-assets have had limited implications in these areas and are not designed in ways that make them suitable substitutes for money.”