Status: 05.07.2021 2:27 p.m.
Shortly before the decision by the European Central Bank (ECB), the German banking industry came out in favor of introducing the digital euro – as a supplement to cash.
An official decision by the European Central Bank (ECB) on the introduction of the digital euro is still pending, but there is little doubt in the financial sector that the central bank will give the green light to such a pilot project. In doing so, it can count on the support of the entire German credit industry from private banks, savings banks and cooperative banks.
In a study available to the Reuters news agency, Deutsche Kreditwirtschaft (DK), the merger of five German banking associations, spoke out in favor of the introduction of the digital euro. “We are convinced that a digital euro is of central importance in order to strengthen Europe’s digital and monetary sovereignty and to secure the continent’s medium and long-term competitiveness,” said a statement.
Citizens should receive digital wallets
The banks’ proposal stipulates that the digital euro should contain three elements: a digital euro for everyday use by citizens as a supplement to cash, a special form for the capital markets and interbank transactions, and so-called “deposit tokens” for use in industry.
For this purpose, the banks could provide consumers with electronic purses, so-called “wallets”, which enable smartphone users to store their EC or credit cards there. Every citizen in the euro zone should also be given a legal right to an electronic wallet at a financial institution of their choice in order to strengthen the acceptance of a digital euro among the population. Like cash, the digital euro should remain non-interest-bearing. The industry association leaves it open whether this also means that no negative interest will be charged with the digital euro.
4000 euros per citizen?
The association also does not give a clear answer to the question of a fixed upper limit for citizens. He only advocates their introduction, but does not name a specific amount – knowing full well how controversial this topic is being discussed. “We are convinced that the amount is of the greatest political, economic and communicative importance and can possibly be decisive for the success of a digital euro,” says the study. The last talk was 4000 euros per head of the total population. The ECB once named the sum of 3,000 euros.
The ECB wants to announce a decision around the middle of the year. Cryptocurrencies like Bitcoin are a thorn in the side of the currency watchdogs, because they are beyond their influence and control. The Chinese central bank has already banned payments with such currencies. However, the Chinese also want to introduce a digital currency. Their influence must be thwarted.
China does not leave the field
In order not to leave the field to China in the field of digital currencies in particular, a joint European, independent solution is necessary, demand the economists at Deutsche Bank. With the introduction of its own digital currency, the ECB would ensure that Europe is neither dependent on non-European digital currencies nor on non-European payment service providers.
Experts also suspect that the ECB is looking for further instruments to influence the behavior of citizens. For example, negative interest rates on the digital euro could encourage consumers to spend their money instead of leaving it in their accounts. This would allow the ECB to expand its monetary policy influence, which is not possible with the recently observed use of credit cards or providers such as PayPal.