German Finance Officials Press for a Digital Euro

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In Brief
  • German Finance Minister Scholz declared the need for the quick introduction of the digital euro.

  • DB President Weidmann called for the same level of transfer service in and out of the Euro zone.

  • Bundesbank board member Burkhardt Balz said the banking system should ultimately benefit users.

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Germany’s head finance officials discussed the pressing need for a European digital currency at the “Future of Payments in Europe” virtual conference on Nov 27.

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The conference, sponsored by Germany’s Deutsche Bundesbank, featured speeches from German finance minister Olaf Scholz and Deutsche Bundesbank board members.

Digital Euro, Pronto!

In the conference’s opening statement, finance minister Scholz noted the tremendous digital money demand on the part of consumers and businesses alike.  He also pointed out that the time for pondering digital currencies is over.

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“On the digital euro, I think we should work very hard. It is nothing where we should wait and see,” Minister Scholz declared.

Scholz stated on Nov 20 that he is against non-centralized cryptocurrency. His comments also come after the announcement by FaceBook that it plans to launch its Libra retail payment network with its own dollar-pegged stablecoin in January 2021.

Other stablecoins from Facebook, including a euro-pegged coin, will follow later in the year.

Euro and Beyond, Digitally

On the matter of payments outside of the Eurozone, Deutsche Bundesbank President Dr. Jens Weidmann declared at the conference that Europeans need to have the same capability for sending and receiving payments outside the eurozone as they do within it. 

Dr. Weidmann also spoke on the role of Central Bank Digital Currencies (CBDCs). He pointed to several aspects of the interaction of government and the economy in particular.

The support given by the central bank should not be underestimated, he claimed. However, central banks also need to avoid impeding private initiatives and solutions to consumers’ needs

Bundesbank Executive Board member Burkhard Balz took a direct shot at the decentralized finance crowd. He addressed one of the main criticisms of the current fiat system and tried to put the focus on the system’s users.

Balz pointed out that the beneficiaries of the system should be those buying and paying through it.

Pondering, Quickly

In their speeches, the officials did raise issues for further discussion. Balz raised the issue that bankers need to examine financial intermediation.

They also need to understand how the digital euro would fit next to private solutions. How central and commercial banks interact is also a concern for him. 

Dr. Weidmann cautioned attendees on the need for secure and reliable systems. He emphasized that the Bundesbank “takes the outage of the ECB’s TARGET2 platform in October very seriously.” He called for those involved to take in the information gleaned from the review of the failure.

The European Central Bank is taking public consultations until Jan 12, 2021, and Balz urged listeners to make themselves heard.

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James Hydzik is a finance and technology writer and editor based in Kyiv, Ukraine. He is especially interested in the development of regulation in the face of increasingly rapid technological change. He previously covered the CEE region for Financial Times banking and FDI magazines. An ardent believer in gut renovating eastern Europe one flat at a time, he currently holds more home renovation gear than crypto.

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