On November 10, the bank’s research arm of Germany’s largest banking institution published a new report on economic estimations and proposals to assist global economies affected by the coronavirus pandemic. The title of the report is “What We Must Do to Rebuild” and it contains interesting details. It is worth noting that, Deutsche Bank is confident that central bank digital currencies or CBDCs will replace cash in the future.
Based on the information taken from the report, the ongoing coronavirus pandemic accelerated the digital cash revolution. According to Germany’s largest banking institution, the revolution will eventually enable CBDSs such as China’s digital yuan or Sweden’s e-krona to replace cash in the long term.
Moreover, the bank called on national governments as well as private companies to work on alternatives to credit cards. Officials should take into account that, worldwide lockdowns and social distancing measures increased the use of cards over cash. Importantly, companies and policymakers must design alternative to credit cards and to get rid of middle man fees.
According to Deutsche Bank, at the moment the priority must be on regional digital payment systems. Moreover, in the future central bank digital currencies will replace cash.
Digital currencies and governments
As stated above, the report is full of important information. The institution warned European policymakers about the risks of not developing their own digital currency project. European governments should not forget about China’s digital yuan or Sweden’s e-krona.
Furthermore, Deutsche Bank argued that lagging behind other jurisdictions might force the adoption of policies by first movers. This is not the end of the story, as the bank called on Europe to develop a digital currency solution to strengthen the euro.
Germany’s largest banking institution is pushing for the accelerated development of a global digital currency development. However, a number of countries are in no hurry to issue central bank digital currencies.
For example, Jerome Powell of the U.S. Federal Reserve declared that the U.S. is not worried about other countries getting a first-mover advantage regarding the CBDCs. According to Powell, the country’s government will not make a decision regarding the digital dollar until it will possible to deal with risks like cyber attacks and privacy.
Digital currencies have the potential to play an important role in the modern world. Governments across Europe and elsewhere should join forces to reach this goal. This way it will be easier to address all challenges such as cyber-attacks.
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