Could a digital euro be a better alternative to Libra? A leading group of German banks thinks so.
The Association of German Banks (Bankenverband) made the case in a new position paper that a stable currency forms the basis of a state sovereignty and that “stability of the existing monetary system must not therefore be endangered by the provision of crypto-based digital money.”
Bankenverband echoed the concerns of the lawmakers and regulators around that world that have questioned if a world-spanning cryptocurrency like Libra should be held in the hands of private actors.
“[Big techs] already have a significant competitive advantage due to the huge amount of data they have collected about their users,” the position paper stated. “An imbalance of power of this kind in favour of a large corporation not only invites abuse of power, but also poses a threat to macroeconomic stability.”
Instead, Bankenverband stated that European lawmakers better work together to bring a about the formation of a digital euro.
The position paper continued that several things needed to be done in order for a digital euro to work.
Firstly, EU lawmakers had to ensure the new digital currency had the backing of the people living in the EU. To get that trust, they had guarantee that the digital currency complied with all regulations to the highest degree.
It also called for a uniform supervisory and regulatory framework and that existing consumer protection standards must be observed.
The German banks also called for European lawmakers to establish a basis in competition law to facilitate pan-European payment solutions.
Moreover, Bankenverband urged the lawmakers to create a clear definition of who the user of the digital euro is, whether they are human or machines. This would require a pan-European identity standard.
Given the Bankenverband were concerned about how Facebook and other big tech firms might use people’s data, it also unsurprisingly called for a viable data protection strategy.
Facebook is by no means the only big tech company to have pushed into the FinTech space. Amazon, Apple, Alibaba and Uber have all launched financial initiatives over the years.
As FinTech Global recently reported, tech titans launching FinTech projects comes with challengers, risks and opportunities for startups and incumbents alike.
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