Deutsche Bank, Germany’s largest banking institution is confident that digital currencies (CBDC) issued by the central bank will replace cash in the future.
The bank’s research arm, Deutsche Bank Research, released a new report on economic estimates and proposals to help the global economy hit by the coronavirus pandemic. The study, entitled “What We Must Do To Rebuild” reads Publicity on November 10th.
In the report Deutsche Bank claims the current COVID-19 pandemic has accelerated the “digital cash revolution”. According to the bank, this revolution will allow a CBDC like China’s digital yuan or Sweden’s e-krona to replace cash in the long term. Deutsche Bank urged national governments and private companies to work on alternatives to credit cards.
“Global quarantines and social distancing measures have only increased the use of cards instead of cash. To respond, businesses and lawmakers must develop alternatives to credit cards and eliminate broker fees. […] For now, regional digital payment systems should have priority. In the long term, the central bank’s digital currencies will replace cash. “
In the report Deutsche Bank Research has also warned European policymakers of the risks of not developing a digital currency project of their own to respond to China and Sweden’s active advances in this area.
The bank argued that lagging behind other jurisdictions could force pioneer adoption of guidelines:
“If other countries fail to catch up, they may be forced to use other countries’ digital currencies and policies as payment.”
The bank called on Europe to develop a solution for digital currencies to strengthen the euro and the current geopolitical situation. “For this we need an independent European payment solution,” wrote Deutsche Bank Research.
As Deutsche Bank pushes for the accelerated development of a global digital currency, several countries are in no rush to issue a CBDC.
In October 2020 Federal Reserve’s Jerome Powell said the United States was not concerned about other countries having the advantage of being the first to act in issuing a CBDC.. The Fed chairman said the U.S. government will not make a decision on spending the digital dollar until the risks associated with CBDCs such as cyberattacks and privacy are resolved.
New Zealand and Russian officials have expressed a similar stance, saying they would prefer to take a “watch and wait” approach.