The Association of German Banks (Bankenverband), an organization consisting of 11 member associations and over 200 commercial banks, has said in a new research paper that the Eurozone economy will significantly benefit from a "digital euro". The Association considers blockchain and cryptocurrency technologies as a "basis” for future digital currency.
The project has already been supported by Deutsche Bank, Credit Suisse and Commerzbank, which expect to attract as many investors as possible to the initiative. Euro-based cryptocurrencies should not be the equivalent of the digital renminbi or Libra. As the basis of the settlement system, it was decided to take the Single Euro Payments Area, into which, due to legislative regulation, it is impossible to integrate smart contracts and other processes.
According to the Bankenverband, the road to a pan-European digital Euro can only succeed when all member states work out a common ground for it in accordance with existing competition law. It further added that banks must have equal footing and the law applicable on that front will have to ensure legal certainty required for different European market participants to cooperate.
The paper also argued that even though a digital currency backed by governments will likely gain incremental importance in today’s digital era, the authorities calling the shots must ensure that it doesn’t post an existential threat to the current monetary system.