Recently Professor Dr Philipp Sandner, head of the Frankfurt School Blockchain Center (FSBC), and Jonas Groß and Jong-Chan Chung, who are project managers at the FSBC, conducted a study on how DLT-based payment systems and a programmable euro can promote innovative business models for the economy. Furthermore, the study recommends actions to strengthen Germany as a financial centre.
By Arnaldur Skorri Jónsson
With business processes in Germany’s real economy and within the financial sector becoming increasingly complex, their current payment infrastructures are unable to address the needs of new business models. The study points out that infrastructures such as SEPA or TARGET2 are unable to service said business models due to the complexity of their data synchronisation, which can lead to system discontinuities, and “counterparty risks arising from the asynchrony between delivery and payment cannot yet be entirely avoided.” This furthers the need for payment solutions that eliminate the inefficiencies of current infrastructures and lay a foundation for promising business models.
A solution in the form of a programmable euro can be essential to promote innovative business models for Germany. As the European Central Bank (EBC) is unlikely to provide such a solution before 2026, Germany’s private sector is called on to develop it in a timely fashion.
“A programmable euro developed using Distributed Ledger Technology (DLT) by institutions and the private sector would meet the requirements of the real economy and the financial sector” while also addressing the current monetary system’s limitations. Potential configurations of this could be
- Stablecoins issued by (as yet) unregulated companies
- Tokenized commercial bank money issued by financial institutions
- Tokenized e-money issued by e-money institutions
- Trigger solutions combining conventional payment infrastructures and DLT.
The study conducted demonstrates how a euro payment solution…
