Germany Follows China, Issuing its own National Cryptocurrency to Fight Libra
FRANKFURT – Deutsche Bundesbank is set to create a cryptocurrency backed by the German state, right after France’s Minister of Finance, Bruno Le Mair declared that France will fight to ban Facebook’s Libra from operating in European soil.
It seems that after China’s announcement of the development and deployment of a government-backed digital stablecoin, Europe follows, with Deutsche Bundesbank, practically Germany’s Central Bank, urging for a similar solution focused on countering Libra, which apparently didn’t perform quite well in convincing the European Ecosystem an international digital currency controlled by the networking giant would “do good”.
The project was previously revealed earlier this year, proposing a government-backed digital currency that should run on Bundes-Chain, a blockchain platform run and supervised by the Deutsche Bundesbank.
According to Germany’s main media outlet, Spiegel, the federal cabinet concluded to approve the blockchain-powered strategy as presented back in June 2019.
The move is adding to the list of governments worrying about the deployment and adoption of Facebook’s own cryptocurrency Libra.
In our previous article, we analyzed in chronological order, how did we get here with Libra, and why is everyone against its promotion on an obsessive level, even when trying to “act cool”.
Like most cryptocurrencies, Libra is a direct threat to the traditional monetary system, so seeing banks and government agencies marching against it shouldn’t be such a big surprise.
On the other hand, if you’d ask Le Mair, who acted almost like a Minister of Defense when talking about Libra, or Mersch, who characterized Libra as a “cartel-like” operation from the European Central Bank’s position, or Heilmann, representative of the Christian Democratic Union who proposed the Bundes-chain about Bitcoin, they wouldn’t be so aggressive, and it is most likely that they already own some Bitcoin themselves.
The real hate behind Libra is mostly generated by a combination of envious feelings and fear, as Facebook has already a well-established network of several billions of users, eliminating any single country when it comes to adoption of a supposed cryptocurrency.
EU officials believe that Facebook threatens the economic sovereignty of the European region, being able to manipulate its native currency in similar ways a central bank handles a national fiat currency.
The CDU, which is at the moment the leading party in Germany, proposes among other things the development of a government-run blockchain which private entities could use to develop their own applications.
“The government provides roads,” says Heilmann. “Why not also providing IT-infrastructure?”
A similar model to that of the People’s Republic of China, who plans to release and distribute it’s national digital currency through local tech-brokers such as AliBaba, WeChat, and Tencent, as soon as November 11th this year.
Germany is a country of its word and the proposal is not limited just on the issuance and distribution of a national cryptocurrency. Among other applications, Heilmann proposes the usage of the state-backed blockchain for digital identification purposes, blockchain-based bonds, and a startup-friendly ecosystem that will help new companies utilize blockchain technology under a legislative framework.
Germany was also the first country to approve a regulated Security Token Offering (STO), which is essentially a fancy name for a new class of ICOs, said to grow popular in the coming years.