Saturday

8th May 2021

Germany adopts blockchain strategy and says no to Libra

  • 'A core element of state sovereignty is the issuing of a currency, we will not leave it to private companies,' said German finance minister Olaf Scholz (Photo: BeatingBetting.co.uk)

The German federal government passed on Wednesday (18 September) a comprehensive blockchain strategy which Berlin hopes will foster the technology and mitigate the risks regarding its implementation.

The strategy aims to unleash the potential of blockchain and distributed ledger technologies (DLT) in the country, supporting the digital transformation in several sectors and preventing risks related to their use and data abuses.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

A blockchain can be understood as a shared database highly-secured due to its structure that can reduce transaction costs while increasing transparency - blockchain is just one type of distributed ledger technology, which is essentially a decentralised system.

According to the plan, the developments in Germany are in line with the EU's strategy, which states that "only with a perfect digital single market, Germany will remain globally competitive".

"We want to be at the forefront and further strengthen Germany as a leading technology location," German finance minister Olaf Scholz said.

Although blockchain was initially used for Bitcoin and other cryptocurrencies, there are countless fields of application for these technologies in different sectors such as energy, mobility or health.

The German comprehensive blockchain strategy also aims to protect consumers and state sovereignty - two concerns voiced by several authorities regarding the implementation of new virtual currencies in European markets.

"A core element of state sovereignty is the issuing of a currency, we will not leave it to private companies," said Scholz.

Later this year, the German government will also try to propose legislation which will allow blockchain-based electronic bonds, reported Reuters.

Push on blockchain technology

According to a report released last July by the EU Parliament, "blockchains' crypto-economic incentive structures might have the potential to influence the current economics behind data-sharing".

However, the approach towards the implementation of these new technologies is different in each member state.

Last year, the UK adopted a fintech sector strategy, which sets out plans for preserving the financial tech hub of Europe in the UK while increasing their influence in the sector.

In Estonia, over 95 percent of the data generated today by hospitals and doctors is digitised, and blockchain technology is used to secure the health records.

The southern European states – France, Italy, Spain, Malta, Cyprus, Portugal, and Spain – signed a joint declaration last December to promote the adoption of blockchain in Europe to "transform" their economies.

"We believe that distributed ledger technologies can result in further democratisation of the European economic model," said the document.

No regulation, no Libra

During an informal meeting with the finance ministers of the EU that took place last week, France and Germany made clear that Facebook's Libra currency has significant risks to the financial sector in Europe.

European Central Bank board member Francois Villeroy de Galhau said on Tuesday that "stable coins" like Facebook's Libra are likely to face a tough regulatory approach as "this new situation is a major challenge for regulators and supervisors".

"Stable coins are quite different from speculative assets like Bitcoins. However, regulators will have to keep a very close eye at the global level and believe me, we will do it," Villeroy said.

The co-creator of Facebook's cryptocurrency Libra, David Marcus, posted on Monday on his Twitter that "Libra is designed to be a better payment network and system running on top of existing currencies, and delivering meaningful value to consumers all around the world".

"We will continue to engage with central banks, regulators, and lawmakers to ensure we address their concerns through Libra's design and operations," he added.

The German federal government is aiming to control the public offering of certain virtual currencies that do not fall inside the EU directives - electronic money or markets in financial instruments directive.

However, the result of the consultation carried out by the German government suggests that stakeholders prefer predominantly a European regulation to address cryptocurrencies.

France urges EU virtual currency rules amid Libra risk

France has urged the EU to introduce a framework for the regulation of cryptocurrencies, after the introduction of the new Facebook virtual money 'Libra' threatens the financial stability of the EU.

Opinion

Facebook has to answer some tough questions about Libra

German MEP and member of the Economic and Monetary Affairs Committee, Markus Ferber, warns of four separate threats from Facebook's Libra. A good moment to kick off the debate would be this week's G20 summit.

Opinion

A digital euro - could it happen?

"Banknotes are still to stay," European Central Bank president Christine Lagarde said at a recent conference, "but I think we will have a digital euro."

News in Brief

  1. Report: Czech minister plotted to bury evidence on Russian attack
  2. Putin promotes Russia's 'Kalashnikov-like' vaccine
  3. Coronavirus: Indian variant clusters found across England
  4. UN report encourages EU methane cuts
  5. EU court upholds ban on bee-harming pesticides
  6. Israeli tourists welcomed back by EU
  7. EU duped into funding terrorist group, Israel says
  8. Brussels prepares portfolio of potential Covid-19 treatments

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  2. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  3. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  4. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  5. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  6. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance

Latest News

  1. EU ambassadors flock to Red Square for Putin's parade
  2. MEPs win battle for bigger citizens' voice at Conference
  3. Hungary gags EU ministers on China
  4. Poland and Hungary push back on 'gender equality' pre-summit
  5. EU preparing to send soldiers to Mozambique
  6. EU now 'open' to vaccine waiver, after Biden U-turn
  7. EU mulls using new 'peace' fund to help Libyan coast guard
  8. Poland 'breaks EU law' over judges, EU court opinion says

Join EUobserver

Support quality EU news

Join us