Angela Merkel’s government is keen to make use of blockchain tech, but wary of cryptocurrencies’ potential to dilute governments’ roles issuing and managing currencies. (Image courtesy: Initiative D21)

Germany has published a comprehensive blockchain strategy
as the country seeks to be “at the forefront of innovation” – but issued a
stark warning on private firms’ attempts to issue digital currencies.

The federal government’s strategy – which is only currently
available in German – aims to capitalise on the potential of blockchain and
distributed ledger technologies (DLT). Its publication comes as the European
Union and national regulators ponder how to regulate much-hyped new projects
such as US social media giant Facebook’s planned Libra cryptocurrency.

“We want to be at the forefront of innovation, and we want
to reinforce Germany’s position as a leading technology hub. As part of the
internet of the future, blockchain technology can play a key role in our
efforts. At the same time, it is essential to protect consumers and state
sovereignty. One of the core activities of a sovereign state is to issue a
currency. We will not cede this task to private companies,” said
the country’s finance minister
, Olaf Scholz.

Germany’s 24-page blockchain strategy – which is only
available in German
– was passed by Chancellor Angela Merkel’s cabinet last
month, and followed a public consultation in the spring.

Chain reaction

Germany’s government says that it wants the country’s
blockchain “ecosystem” to grow, and that it aims to help make Germany “an
attractive hub for the development of blockchain applications in business and
public administration”.

The strategy outlines Germany’s blockchain priorities,
including the development
of a digital identity
system. The government will explore the benefits of
blockchain in use-cases such as maintaining the records of civil status,
document registration, passports and ID cards, as well as promoting the testing
of blockchain-based verification of higher education certificates.

The strategy’s reference to private companies issuing
currencies has been interpreted as a challenge to Facebook’s Libra, a so-called
‘stablecoin’. The German government says it “will work at the European and
international level to ensure that new digital means of payment do not become
alternatives to official currencies”.

Germany has recently teamed up with France in jointly
seeking to stymie Libra, with Germany’s Scholz and his French counterpart,
Bruno le Maire, issuing a joint
last month. The countries have backed the development of a public

David Marcus, chief executive of Facebook’s digital
financial services subsidiary Calibra, said on
in September that “Libra is designed to be a better payment network
and system running on top of existing currencies, and delivering meaningful
value to consumers all around the world’.

He added: ‘We will continue to engage with central banks,
regulators, and lawmakers to ensure we address their concerns through Libra’s
design and operations.’

It was reported
this week
by the Financial Times that the European Commission has asked
Facebook and the Libra Association – the entity managing the Libra project – to
respond to questions on financial stability, money laundering and data privacy

Catch up briefing

A blockchain
is a decentralised, distributed and public digital ledger used to record
transactions across many computers, so that any involved record cannot be
altered without the alteration of all subsequent blocks. Transactions are
grouped in blocks, recorded one after the other in a chain of blocks: the ‘blockchain’.

The first major application of blockchain was Bitcoin,
which was released in 2009. Bitcoin is a cryptocurrency and the blockchain is
the technology that underpins it. Within financial services, other potential
uses include speeding up and simplifying cross-border payments, and improving
online identity management. Blockchain also has fields of application in
sectors such as healthcare – for example, in managing medical records – and

(Excerpt) Read more Here | 2019-10-10 21:40:25
Image credit: source


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