In an increasingly digitized world, banks need new and intelligent solutions. Intelligent automation is the key to greater efficiency. With this in mind, Giesecke Devrient’s 168-year-old printing company made its first investment in blockchain technology and led a $ 17 million Series A in Metaco, a recent report by Forbes found.
Metaco is a leading Swiss startup for security-critical infrastructures with which financial institutions can enter the ecosystem of digital assets. The company is trusted by the world’s leading banks, stock exchanges and infrastructure providers.
Founded in 2015, Metaco brings together a diverse team of industry specialists from the fields of software, security, cryptography and banking to transform the financial services industry. The company is deeply integrated into the banking sector through a growing network of strategic partners and institutional shareholders.
However, Giesecke Devrient with more than 160 years of experience is actively helping to shape one of the most important trends of the future: security.
The traditional technology group creates trust in global payment processes, modern communication, digital identities and data security by offering innovative products and solutions.
Every day billions of people benefit from innovations from Giesecke Devrient in their personal, digital and business lives. With around 11,600 employees in 32 countries, the group of companies develops, produces and sells products and solutions for the protection of payment processes, identities, connectivity and data.
Giesecke + Devrient: Build trust
Their area of application can be summarized on the one hand in the production of security features for banknotes, paper money, security printing, smart cards, cash handling systems and on the other hand in digital innovations in payment solutions. It also has an important advisory department for the print security sector and for central banks and their activities around cash.
The first “digital” step
In July 2017, when the price of Bitcoin hit $ 20,000 and the Initial Coin Offering (ICO) exploded, G D announced its interest in the digital currency sector with the publication of a “white paper” entitled “Digital Money”. The company’s 35-page report encouraged central banks and customers to “adopt” electronic alternatives and expand their traditional banknote businesses: “A digital currency would be attractive to central banks as it would help customers” on their digital journey, “the company said in a report.
G D had predicted that the rapid rise in altcoins and discussions (even then) about the introduction of their own digital currency, the scales, through Facebook would shake many central banks. This is because central banks wanted to keep control of the money supply but did not have the technical know-how and resources to enter the “digital arena”.
Last year, G D presented its first software product that aims to combine these two worlds: G D Filia. In the autumn newsletter of the official forum of currency and financial institutions (OMFIF), Christian Jüttner, Global Head of Coin Technology at G D, described G D Filia as a “Cash on the Register” product. Agnostic platform used by central banks and distributed through commercial banks or other financial institutions for use in smartphones, smartwatches, and other “digital wallets”.
Although GD is unclear about the details of its new software, as in the case of Bitcoin, its “coins” are most likely derived from an algorithm and controlled solely by the central bank that maintains the data file. This new type of currency does not require the use of an account and is “open source” so that payment service providers can integrate their offers directly into it.
In the brief presentation of “Filia”, GD left open the possibility that this new generation of Central Bank (CBDC) digital currencies could completely eliminate the need for an “intermediary,” the role commercial banks play today. As a currency, it could be issued directly and not through an institutional custodian. Citizens and other users of the currency would thus have an account directly with each country’s central bank.
Digital currencies could solve the problem of not having access to banking services
The introduction of Bitcoin in 2008 should be a direct response to this lack of confidence in the banking system. Since then, the cryptocurrency market has grown rapidly and there are more than 3,000 digital tokens in circulation in the open market. While central banks first ignored Bitcoin at the time of its inception, they are now committed to technology.
With that in mind, issuing digital currencies immediately would solve the problem of “No access to banking services” as the only requirement for access would be the use of a “smartphone”. Getting financial support in a crisis, for example, could now be as simple as sending an email.
Ralf Wintergerst, CEO of Giesecke Devrient, believes that: “It is very difficult to give money to people when they don’t have a bank account. But maybe they have a phone “. The name of the new digital currency software “Filia” from G D is Latin. “She is the new daughter or daughter of the central bank”, mention, that.
While Amazon Pay, Google Pay, Alipay, and Facebook saw the opportunity to set up an unlimited payments network, they all need an account in order to access their networks. Finally, for-profit companies employ business models that could conflict with the real value of the currency.
“The central bank’s digital currency is a common good,” he said in a recent note. “It is widely accepted, free from social and economic obstacles, and can be used independently by the publisher. This makes it a truly democratic and free medium. To be widely accepted, the CBDC must be truly anonymous to the honest user,” added he added. .
For his part, Wintergerst stated that “programmable” money issued by a central bank may have certain built-in functions that banknotes or even cell payments could never offer: “For example, you can indicate that amounts up to $ 1,000 are incomprehensible. The owner is anonymous. “, points out and adds:“For amounts over USD 1,000, for example, the owner must be declared because he (e.g. the software) enables the definition of limit values and conditions for different values and for different purposes.”
One factor influencing the production of digital currencies is of course cost. In the case of Bitcoin, it is known that the cost of “mining” energy alone is significantly higher.
GD, on the other hand, charges between $ 30 and $ 250 for the design, production and shipping of 1,000 banknotes, depending on the security features it contains, which in turn depend on the value of the banknote. The US Federal Reserve, which prints its own bills, says the cost ranges from about $ 0.077 for a dollar bill to $ 0.196 for a $ 100 bill.
So the question is, how much will it cost to create central bank digital currencies. Wintergerst doesn’t say it, but stressed that it will definitely cost less than Bitcoin. “”In a year or two and maybe I can say “, he showed.
Everything that digital money enables – and what doesn’t
Digitization has already given us some examples of how the “old world” and the “new world” can best be combined.
On the one hand, it can be transferred in a matter of seconds – ideally from one mobile device to another – and thus accelerates electronic business transactions, for example. In this way, the amount would reach the online store owner practically at the same time as the order was placed.
As with siblings, there are some similarities. One of the most important is that the value of both banknotes and digital currencies is based on trust. Just look at the history of money, with which almost no company in the world is as closely linked as G + D.
But the switch from US dollars or euros to Bitcoins, which is barely 10 years old and not supported by any regulatory authority, is actually as daring as the big change almost 170 years ago.
The banknotes were once a virtualization of money, as the material used no longer required an appropriate value, says Astrid Wolff. After the First World War, this medium became mass media because there were also banknotes of lesser value. Confidence in paper money remained despite the hyperinflation of the 1920s.
From a cultural point of view, just like in 1850, we are on the verge of crossing a threshold again. However, it remains to be seen how trust in digital money develops.