The Association of German Banks (Bankenverband), has voiced its opinion in a new research paper indicating the need for a “programmable digital euro”. The group, which consists of 11 member associations and over 200 commercial banks, pointed out the importance of virtual currency in the new age digitization of payment tools.
The paper noted how digital currencies such as Libra has garnered a considerable amount of attention as to how it might shape the digital fiscal landscape of the future. Nevertheless, Libra has also been a constant source of political and economic conflict. This led the Association of German Banks to dive into the endless possibilities of an innovative, but a mainly sustainable monetary system, with appropriate requirements to ensure the stability of the same.
The proposal of the digital euro is expected to function on a common pan-European payment platform. The paper also pointed out that the income tax law must elucidate whether the programmable digital money is a currency or an economic good.
In order to control the associated risks and to create a safe and trusted environment, the paper indicated the observance of apt regulatory standards. It stated:
“To create public trust in programmable digital money, compliance with the highest regulatory standards is essential. To ensure legal certainty, a legal classification of programmable digital money is necessary as well. All innovators must respect a uniform supervisory and regulatory framework. The issuance and custody of programmable digital money should also be possible under existing full banking licence rules.”
China’s central bank may launch its own digital currency in the next 18 months after strong endorsements of blockchain from the President himself, in an urge for it to be self-reliant and to have an edge on the rival countries. However, with Germany tagging along, it looks like China is not the only country in the race of a sovereign digital currency.
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