Last month, the Association of German Banks published a position paper on the digital euro, which was generally supportive of the central bank digital currency (CBDC) compared to another report from Germany’s community bank group that called out the dangers.
The question of a digital euro has been a matter of prolonged debate among German observers, and the report highlights some of the most contentious issues in the discussions. In particular, it stresses that the CBDC should only be brought into circulation by commercial banks who should be “appropriately compensated” for it. It wants to see limits on the amount that may be stored by retail customers and an outright ban on businesses using it as a store of value to counter the risks of bank disintermediation.
Overall, the community bank report sees a “multitude of opportunities” presented by the introduction of a digital euro. However, it argues that its success will depend on its ability to meet citizens’ needs. For example, it should be introduced as a “better form of cash”, able to be used securely by anyone at any time, including being available offline, and “as close to anonymity as the law permits”.
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