Germany’s Minister of Finance and vice-chancellor Olaf Scholz wants to introduce a digital euro. He believes such a digital currency would be good for the European economy and its integration into the world’s financial system. He said this in an interview with the local business news magazine WirtschaftsWoche.
His words are a direct response to the announcement of Facebook’s Libra stablecoin and China’s announcement of a Central Bank Digital Currency (CBDC). “We should not leave the field to China, Russia, the United States or any private providers”, he said.
Last month Germany passed a bill to block any parallel currencies to be launched in the country. Even though there has been some backlash, Scholz is still behind this move. He believes it to be ‘a core element of state sovereignty’ to issue a currency. “We will not leave this task to private companies”, he added.
More digital currencies are coming
Talks about a digital euro just seem to get started. At the same time there are also talks about a digital currency in the United States. Last week Representative French Hill and Representative Bill Foster requested the country’s central bank to consider developing a ‘national digital currency’.
At the same time China is well ahead. The Chinese central bank has been working multiple years on a digital yuan. Reportedly they will launch their CDBC by the end of this year or perhaps early next year.
Digital currencies are inevitable
Whether bitcoin will ever overthrow the euro and the dollar remains to be seen. However, digital currencies are definitely getting a place in our society. Central banks have already expressed their concerns over the announcement of Libra. They stated they ‘have been sleeping’. According to chief economist Mark Cliffe from ING Bank central banks will all have digital currencies within 3 years.
The influence of cryptocurrencies – and bitcoin in particular – should not be underestimated. BayernLB, a major German bank, called bitcoin ‘ultra-hard money’. This means that its rarity is only growing, while demand is increasing. They believe bitcoin to be a better investment than gold in the coming years. According to researchers from the bank, bitcoin will be $90.000 before 2024.
Also published on Medium.