German Associations increasingly push for a digital Euro. After the Association of German Banks has recently issued a statement encouraging a digital Euro, two associations representing retailers and online service providers are now joining the fight.
The support for a digital Euro is growing in Germany. Associations are increasingly pushing the issue higher on the agenda. Last week, the Association of Trading Companies (Handelsverband Deutschland, “HDE”) and the Association of Service Providers for Online Providers (Bundesverband der Dienstleister für Online Anbieter, “BDOA”) issued a joint statement supporting a digital Euro.
Their statement comes just several weeks after the Association of German Banks (“Bundesverband der deutschen Banken”) urged the German government to push for a central-bank regulated digital currency. It consists of more than 200 banks in the German-speaking area, including industry leaders such as Deutsche Bank, Credit Suisse, and Commerzbank.
The message of these associations is clear: A digital Euro would grow economic activity. More and more businesses are starting to realize that and form a supportive community for their common goal.
Breaking the dominance of global payment providers
HDE and BDOA had already discussed the idea of a digital Euro with the European Central Bank (ECB) more than 10 years ago. At the time, the technological basis and the political support for such a project was not sufficient.
Today, things have changed: Blockchain technology makes the implementation of a digital Euro rather simple – and discussions about Facebook’s Libra currency and the increasing adoption of cryptocurrencies have created a supportive political environment.
HDE and BDOA are mostly representing retailers and online businesses. Thus, their communities would be among the ones who benefit the most from more streamlined payment transactions. The goal is “to make purchases secure, inexpensive and reliable at all times,” which requires “an appropriate European digital payment system,” wrote the associations in their joint position paper entitled “The time has come for a digital Euro.”
Today, retailers are dependent on large (fin)tech and credit card companies. Stefan Genth, CEO of the HDE, wrote in a letter to Finance Minister Olaf Scholz, “Global credit card companies have been exploiting their strong position for years and have already reached a market dominance that retailers cannot ignore.” Genth also pointed out that companies like Facebook have an unfair competitive advantage as they also have access to customers’ data.
A digital Euro could break big techs’ monopolies and enable more transactions, which in turn would have a positive effect on the economic activity in Europe and the “dependence on global payment systems” could be reduced.
The costs of inaction are high
The associations also point out the dangers of not introducing a digital Euro: If private businesses like Facebook gained the upper hand over the currency market, “state control over the monetary economy would no longer be possible.” HDE and BDAO are concerned about the consequences for economic stability.
Plus, there is the competition from China, which is already on the verge of introducing a state-owned digital currency. With its own digital currency, the ECB could strengthen the European region and enable businesses to remain competitive.