One of Germany’s largest banking institutions, Deutsche Bank, has urged Europe to accelerate its CBDC development, as it is confident it will replace cash in the future.
The statement was made in a new report by the bank’s research team, titled “What We Must Do to Rebuild”, which listed economic evaluations and proposals to assist global economies hit by the COVID-19 pandemic. The report also discussed a potential shift to digital currencies, and specifically CBDCs, as “cash has come under much scrutiny during the pandemic” due to virus transmission concerns.
According to the bank, the pandemic has only accelerated the adoption of digital currencies, which could lead to CBDCs replacing cash in the future. The report further stressed that there is a need to promote digital currencies in Europe, and that governments and private companies to work on alternatives to credit cards. The document reads:
“Worldwide lockdowns and social distancing measures have only increased the use of cards over cash. To respond, companies and policymakers must design alternative to credit cards and remove middle man fees.”
Deutsche Bank also noted that, if Europe does not accelerate the development of a digital euro, it risks companies being “forced to adopt the digital currencies and policies of other countries”. The report named China’s DC/EP (Digital Currency/Electronic Payment) and Sweden’s e-krona pilot projects, which are leading the charge. China is probably the biggest concern of Deutsche Bank, as it has already held numerous trial projects revolving around its digital yuan.
While the German bank is trying to push for accelerated development of CBDCs, other institutions are in no hurry. The European Central Bank (ECB) does have a CBDC research project and has so far only published explorative reports and surveys around this topic. Last month, U.S. Federal Reserve chairman Jerome Powell said that the country was not worried about being left behind in the CBDC race, and that it will not be issuing a digital dollar until CBDC-associated risks have been resolved.
Other institutions have already realised the importance of developing a digital version of their currencies. For example, last month, the Central Bank of The Bahamas became the first to fully deploy its own CBDC, titled the “Sand Dollar”, though it is only available to its citizens for now. Lebanon, on the other hand, announced it will be releasing its own digital currency sometime in 2021, in an attempt to restore confidence in its shaky banking sector.