In the wake of China developing its own national digital token and Libra fighting to get regulatory approval ahead of 2020, the argument for countries developing their own digital tokens is becoming more and more prominent. Several countries already such as the Bahamas are looking into their own national token and in their case, it was stated that it would come in handy in the case of disaster while other countries like Venezuela developed their own token to combat inflation. Regardless, it is obvious that different countries can stand to benefit in different ways from having a digital token of their own.
Once again, this argument has been put forward but this time by the Association of German Banks (Bankenverband) who represent over 200 private banks in Germany in an October 30, 2019 paper in which they call for a digitally programmable euro.
The Need for a Digital Token
One of the arguments put forward in the paper is that the responsibility of creating currency lies within the various sovereign states and that should any bank or private institution issue their own currency, it must fall within the line of regulations determined by the state or else chaos will ensue. This draws parallels to arguments that have been made against the Libra token claiming that its use will undermine the economic power of local regulatory bodies in the countries in which it will be used.
In this case, the paper states that a digital token of the euro should be created provided that’s a payment platform that is pan-European and concurrent across various countries should be created as well to support it.
“The user of a digital euro – whether man or machine – must be clearly identifiable. This requires a European or, better still, a global identity standard. With every form of digital money, customers should be identified using a standard that is just as strict as that which banks and other obligated entities are required to apply under current legal framework pursuing the combat against money laundering and terrorist financing,” the paper says.
While it is clear that the benefits of crypto are being acknowledged across the globe, this paper states that this payment system will only be efficient if it works with common standards and a common currency.