so Far, we Germans loved our cash and have always had the utmost confidence in its payment function. But now, in times of Corona, wins the contactless payment card or smartphone is increasingly accepted, while the fear of a devaluation due to Inflation divides society. How ever it may come, one thing is certain: digital money, there is no other way.cash-abolition? Digital money is becoming more and more popular
is Basically digital money unlike physical cash is not tangible, but it nevertheless represents an increasingly popular type of storage or payment.
the Digital money exists in two manifestations: firstly, there is digital money, which is a card-based System is based, like debit or credit card. On the other, it exists a software-based System such as Paypal. These types of digital money have, although physically non-existent, the same value as cash and are usually directly in connection with the own Bank account. On the basis of which payment transactions are never anonymous, because the owner of the money may, at any time, the credit card company or Bank back followed.Facebook is the competition for Central banks - own currency, the Libra comes this year
Yet for this year, the introduction of Facebook's planned private digital money with the name Libra. This Libra of Facebook is designed as a so-called Stable Coin, which is supposed to protect the currency from strong exchange rate fluctuations like for example Bitcoin. To achieve this, Libra will be at a basket of well-known currencies such as Euro, US Dollar, Japanese Yen, and British pound as well as short-term government bonds in this currency over space bound.
Specifically it works like this: The user pays in its national currency at a Virtual Asset Service Provider (VASP) such as, for example, a Wallet provider, or a crypto exchange. The VASP forwards the amount to a designated dealer who buys in a predetermined ratio, the corresponding state bonds. Government bonds (for example, 80 percent) and Cash (for example, 20 percent) will then be delivered to the Libra Reserve, according to the Facebook private Central Bank. The Libra Reserve, then the equivalent in Libra on the dealer and the VASP to the user. The Libra Reserve is controlled by the Libra Association, a conglomerate of dozens of participating technology companies, including Facebook.
Also, Libra will not be anonymous, on the contrary, trust in the protection of personal data and the integrity of the intentions of the Private Institution Libra Association must be given. As a Motivation for the Libra-introduction of Facebook is to allow 1.7 billion people in developing countries with access to payments, even if you have no Bank account and no credit card. A Smartphone is enough to send Libra in a matter of seconds on a public Blockchain via Facebook Messenger, WhatsApp, or Instagram in a cost-effective and direct. With its billion users, Facebook with a Libra could be right off the bat to the largest currency area in the world, and thus to a strong competition for the Central banks.Central banks under pressure to act
As in the case of Libra is also the basic idea of CBDCs, ultimately, the Transfer of physical cash in the digital world. However, in the design of the CBDC system, the impact on the private banking sector, the social acceptance and monetary policy options of Central banks a far greater role. Moreover, the ECB seems to be at least trying to implement a certain degree of anonymity when you Pay similar to cash. You will experience Beate Sander live!
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In December 2019, the ECB introduced a CBDC-prototypes-anonymous payments allows and at the same time Anti-money laundering regulations (AML) are taken into account. This prototype – let's call him E-Euro – is based on the Blockchain technology, with the private commercial banks make up the distributed network. The commercial banks give out the E-Euros on behalf of the Central Bank to the customer, in addition, the customer receives a limited number of so-called anonymity Voucher of the ALM authority, the grant to the customer, in turn, up to your usage anonymity. However, it is important to note that these transactions remain only to the Central Bank and the ALM-authority anonymous. The involved commercial banks to have insight.Digital currency by the Central banks provides security
Given this limitation, the question is what is the key advantage of the E-Euro is compared to the current payment systems. The answer lies in the new quality of safety. Finally, it is Central Bank money, the ECB guarantees to the full extent for the Saved (in contrast to commercial banks in the event of a financial crisis). The fact that digital counterfeiting is in a decentralised System is much safer than cash. However, the control of the Central banks (keyword negative interest rate) is likely to be even higher. About the author
Michael Reuss, the managing partner at the asset management Huber, Reuss & Kollegen.
Whether it will prevail in the future of digital money, the Central banks or from the private sector, or whether both systems can exist side by side, for the Moment, still to be seen. From today's point of view, a legally recognized digital money without the control of the Central banks seems unrealistic. However, it is clear that estimated up to the year 2025 20 billion (!) Devices connected to the Internet, and sooner or later, the payments involved. Equipped with a Wallet, these devices will make each other automated payments without a person or a Bank to be involved with. In view of this scenario is clear: to digital money, there's no way around it. You Protect Your Assets!
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