The Programmable Euro
Germany recently launched their national blockchain strategy. One of the fundamental building blocks and food for discussion is the digitization of the Euro; the process of integrating the Euro on a blockchain system. As outlined in the Süddeutsche Zeitung Digitale Medien GmbH, other countries such as China are progressing rapidly on the topic of central bank digital currency (CBDC), whereas Germany still lacks an answer to this essential question. Furthermore, even privately held companies such as Facebook released their plan of developing its virtual currency, Libra, where they essentially take the position of a central bank.
Considering the future of finance, it becomes increasingly important to leverage efficiencies triggered by process automations. In detail, several blockchain protocols and Facebook’s Libra enable smart contracts to create a variety of business process optimizations through the automation of trustee functions.
But in order to leverage this theoretical efficiency gains, the Blockchain protocols & smart contracts must be interoperable with the established financial services infrastructure. As smart contracts only interact with tokens and fiat currencies can only be settled within the banking infrastructure, most Blockchain efficiency gains hit a glass ceiling as they can not be leveraged. Additionally, the Federal Republic of Germany states, instead of allowing technology companies such as Facebook to assume the role of states and central banks, the blockchain strategy raises the discussion around a state-owned stable coin. The e-money directive establishes a regulation regime for stablecoins in the European Union in that regard.`Hence a solution must be found to combine bank accounts with Blockchain wallets, to tokenize the Euro and make it programmable, while staying regulatory compliant in form of an e-money license.
There are some projects already in the pipeline in Germany. We at CashOnLedger created the programmable Euro based on Blockchain Technology combined with an E-Money license.
Our solution enables all previously developed smart contracts to come to life by combining Blockchain Technology with the established financial services ecosystem. We do this by creating a bridge between the bank account and the blockchain wallet, so that the Euros in the bank account are represented digitally in the Blockchain wallet in the form of tokens.
These tokens can now be bound to smart contracts, and are frozen into an omnibus account in the banking system. Whenever a transaction is triggered by the smart contract and token ownership is swapped, a transaction between the two bank accounts is triggered simultaneously. This allows a variety of autonomous payment processes, where a human interaction is not necessary anymore. Accordingly, our solution does not only help digitize the Euro, but rather enables the rethinking of the value chain and allows digital business models to emerge.
Overall, we have built the regulatory compliant answer to a fully digital currency and hence give financial services providers in Europe the chance to strike back against Facebook’s Libra and other advancing nations such as China. The race is on, but we are already on track!
Remarks
It’s our pleasure to share this article to you, we welcome you to share it with your friends and colleagues. Visit the website of CASH ON LEDGER and find out more about getting traditional currencies such as Euro, Swiss Franc, US Dollar on blockchain. Or get frequent updates by following our LinkedIn account.
Serkan Katilmis is tech entrepreneur and investor, who has more than 20 years of experience in top-tier management consulting. As CEO of CASH ON LEDGER, he promotes the Euro on blockchain systems such that smart contracts can be used in an industrial setting or in B2B contexts. Prior to that, Serkan was working for leading organizations Goldman Sachs, accenture and PwC as an executive. He holds an MBA from Duke University and completed several executive strategy programs at INSEAD. You can contact him via Linkedin.
Maximilian Forster focuses on business development working for CASH ON LEDGER. He is also in close connection with the blockchain ecosystem being a co-founder of the Blockchain Bayern e.V., member of INATBA and member of the Blockchain Taskforce at Bitkom e.V.; previously, he helped to build up the DLT and blockchain service offering of KPMG and Accenture and worked on the blockchain investment strategy for Picus Capital. He is also in close connection with financial organizations and industrial companies: e.g., he has contributed to the Goethe University Frankfurt’s “Digital Banking Practical Handbook” and DHL’s “Blockchain in Logistics” publication. You can contact him via Linkedin.
