The Christian Democratic Union (CDU) and the Christian Social Union (CSU), one of Germany’s biggest political groups, has expressed interest in developing a stable coin based on the euro. The party believes the move will allow Germany to keep up with global technological advancements, enable full oversight of central banks, and reduce overall costs.
The Union first revealed its plans through an announcement titled ‘Investing in the digital future,’ in which it reasoned that Germany is currently in a prime position to set a global benchmark for the regulation and adoption of blockchain technology. The party stated that it is currently devising a new “forward-looking” regulatory framework that will encourage startup growth and funding in the sector.
Nadine Schön, Vice-President of Digital Policy at CDU/CSU, said that Germany’s regulatory approach should not be limited to Bitcoin alone. He brought up several other promising blockchain applications, including digital securities, notary-certified digital identities, and digital corporations. To that end, the party also published a twelve-page paper exploring the various use cases of the technology.
The paper notably includes ‘Digital Euro’ as one of the potential use cases of blockchain technology. It goes on to describe a state-controlled digital currency that is cheaper and faster than its fiat counterpart, and yet, without the volatility or risk that comes with modern-day cryptocurrencies.
The paper’s authors went on to speculate how a potential stable coin would not change existing monetary policy if it was not a completely independent currency. They suggested that a small part of the existing euro supply be digitized and made available as a global means of payment. On the implementation front, the e-euro could be built as an ERC-20 compliant token on the Ethereum blockchain — making it compatible with a large number of existing wallets.
The Union’s paper comes just days after Facebook announced that its rumored Libra digital token will release in the first half of 2020. If the token goes on to become wildly popular in the region, the German central bank will almost certainly find itself in a precarious position and unable to effectively control the flow of wealth. The recent surge in prices of mainstream cryptocurrencies can only have further contributed to this fear.
By providing an official state recognized stable coin, the CDU and CSU Union likely hopes that citizens will not turn to decentralized alternatives such as Bitcoin instead. However, given that Germany is only one of the 19 eurozone countries and does not have sole authority over the European Central Bank, it remains to be seen how much traction this concept will gain in the future.