German politicians of all colors show support for a digital Euro. In the meantime, Libra’s future is unclear and China is about to launch its own digital currency.
Germany’s finance minister Olaf Scholz has taken a positive stance towards a digital Euro. In an interview with WirtschaftsWoche, a leading national business news outlet, he said, “Such a payment system would be good for the [European] financial center and its integration into the global financial system.”
Just some weeks ago, the German government published its Blockchain Strategy, which also included the build-up of a government-run “Bundeschain” and potentially a digital Euro.
Recently, the support for a digital European currency has been growing among German politicians. Members of parliament from different parties across the entire political spectrum have come out in favor of a digital Euro. Scholz himself is a member of the center-left party SPD, but also MPs from the center-right party CDU and even from the far-left party “die Linke” have spoken in favor of a government-run digital currency.
Libra’s future unclear as politicians and founding members express concerns
In the same interview, Scholz also expressed his disapproval of Facebook’s Libra currency, of which he remains “very, very, critical.” He said, “A core element of state sovereignty is the publication of a currency, we will not leave it to private companies.”
Libra’s future is currently unclear. The project is facing opposition from politicians not only in Europe but also in the U.S. and other countries. Moreover, some of the founding members seem to be critical about the project’s progress.
Paypal has already decided to pull out of the association formed to govern the project.
Jorn Lambert, executive vice president of digital solutions at Mastercard, told CNN, “Obviously, we would only support and condone Libra if it is compliant with all regulations and respectful of what regulators would want.”
Visa CEO Al Kelly said in an interview with CNBC: “It’s super early in the process. We’re not a member of anything, nor is anyone a member of anything.”
So far, all the 27 founding member companies have only signed non-binding letters of intent and agreed to put up $10 million apiece, though none had paid any money yet.
So far only talk but no action
The digital Euro, however, is not just about Libra; it is primarily about creating a more efficient currency system to fuel economic growth within the European Union. An e-Euro could cut transaction costs, speed up processing times, and warrant governmental oversight of the digital currency space, leading to more trust and investor confidence.
And then there is international competition. Scholz said in this regard,“We should not leave the field to China, Russia, the U.S. or any private providers.”
But precisely that seems to be happening at the moment. China has already announced it was in the last stage of developing a digital Yuan. The Chinese government has proven to progressive in the space and does not want a US-dollar centric cryptocurrency to dominate the market.
Thus, European lawmakers would be well-advised to push a digital agenda as well, because once a national digital currency has established a strong market presence, it will become more challenging for subsequent currencies to compete.
It’s therefore a positive sign that leading German politicians are seeing the need and openly push for a digital Euro. However, the political process takes time and there is currently no pilot project underway at the European Central Bank, which would eventually be the institution to oversee the implementation of a digital Euro. Thus, so far, there is only talk but little action. But at least there is talk.