German banks calls for collaboration with ECB to create digital Euro currency

The German Banks association representing more than 200 private commercial banks issued a statement on Oct 30 regarding their position on the crypto-based digital currency. As per the statement, German banks support digital euro currency and suggest the European Central Bank (ECB) work together with the banking industry to create DLT-based digital euro currency.

European Central Bank (ECB) proposed a plan for digital Euro currency much before Facebook’s Libra announcement. However, the proposal met opposition from banks. As per the proposal, users deposit or withdrawal digital currency directly at the ECB. Once issued, users can use the digital euro currency without the need of a bank, clearing counterparties, or intermediaries.

With Facebook’s Libra planning launch in 2020, many European leaders have called for Europen Central Bank to accelerate the development of Europe’s own digital cryptocurrency for real-time payments in the eurozone.

In a news conference after the meeting of EU finance ministers in Helsinki, ECB board member Benoit Coeure said that Libra was a “wake-up call” and “we also need to step up our thinking on a central bank digital currency.”

German banks support digital cryptocurrency if interpretability with book money is ensured:

In the wake of heightened pressure from European finance ministers to revive ECB-issued digital currency plans, the German Banks association in the statement said that they support innovation and blockchain technology as key to the evolution of digitalization. However, the provision of digital cryptocurrency should not endanger the existing monetary system.

In their recommendation, the association suggests the European central bank (ECB) work together with the banking industry to create a DLT-based payment system. A system that could integrate DLT protocols and smart contracts with existing payment infrastructures such as SEPA instant payments scheme.