It is a rare day that a banking institution or group of banks comes out in favor of anything having to do with cryptocurrencies and blockchain technology. It is even rarer still after considering the fact that government officials have for months been on a caustic rant against Facebook, Libra, and all things crypto. While timing might be everything in some venues, the Association of German Banks (Bankenverband), which represents more than 200 private commercial banks and eleven member associations, has released a position paper which states that the “economy needs a programmable digital euro.”
This move comes at a time that banking leaders across Europe, including a few from Germany, have blasted Libra, cryptos, and any other perceived digital threat to domestic currencies and monetary policy. According to CoinTelegraph, Mario Draghi, the departing head of the ECB, also chimed in with his negative evaluation:
Thus far, stablecoins and crypto-assets have had limited implications in these areas and are not designed in ways that make them suitable substitutes for money.
In a way, the paper appears to be an attempt to support the new digital age, while putting one toe in the water, but keeping everything else firmly planted in “Old World” thinking. Its initial proposition sounds logical enough, embodying pretty much what cryptos have set as their mission statement:
In order to maintain Europe’s competitiveness, satisfy customers’ needs and reduce transaction costs, the introduction of euro-based, programmable digital money should be considered.
If you go back two decades, these very words seem to have been lifted from the original position paper that proposed a unified single currency for Europe – the Euro. One goal, which was achieved after years of wrangling, but not as well as it could be done with Bitcoin, for example, was to make cross-border payments between individuals in member countries easy, inexpensive, and timely, hopefully, instantaneously. As researchers have found, blockchain-based currencies can handle this “problem” across the globe, the very reason for Ripple and even for JPMorgan’s crypto initiatives.
The Bankenverband, however, took two steps back by insisting that existing monetary policies and conventions must never “be endangered by the provision of crypto-based digital money.” The paper does not define what actions constitute their perceived fear of “endangerment”, but nevertheless, it urges domestic and international policymakers to take the necessary steps to ensure that private currencies are never allowed to compete with national digital currencies.
Once again, there is no attempt to define “competition”. We are left to ponder that Pound Sterling does not compete with the Euro, but somehow Bitcoin, with a market cap of roughly $170 billion, is a devout “competitor? What about Gold? Does it not compete with the Euro? Total Gold reserves are estimated to be in the range of $8 trillion, yet it is exempt from the protestations of this German banking paper? To rival Gold, one BTC would have to be equivalent to approximately $445,000. I think the German bankers are overreacting, but fear can do strange things even to the minds of conservative bankers.
It is becoming comical how bankers are suddenly awakening to the “Digital Age”, as if they had been in deep hibernation for the past decade. Mark Zuckerberg has suddenly become “Public Enemy Number One”, and any attempt by his organization to help humanity in situations that banks refuse to address is suddenly regarded as heresy. You can almost here them shouting: “Burn him at the stake” and “Burn Libra, too!”
As CoinTelegraph reports: “The president of the European Central Bank is joined in his sentiments by the German federal parliament, which recently released a statement in which they said that cryptocurrencies such as Bitcoin (BTC) are not real money.” Does that mean that Gold is “not real money”, too?
As a last backhanded slap at cryptos, the statement goes on to say: “It will be ensured that stablecoins do not establish themselves as an alternative to state currencies and thus call into question the existing monetary system.” Is there a German translation for: “What you fear, you will create”?