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MIL OSI Translation. Region: Germany / Deutschland –

Source: Federal Ministry of Finance International / Financial Market

The need for programmable payments is growing in the German economy. This has been determined by the “Programmable Money” working group initiated by the Federal Ministry of Finance and the Deutsche Bundesbank. In this group, experts from 19 companies in the real and financial economy discussed possible payment methods in new, innovative business cases. “The working group made an important contribution to the design of future payment methods in Europe. In the coming years, important groundwork will be laid for digital transformation. We want to be at the forefront, ”said Jörg Kukies, State Secretary in the Federal Ministry of Finance. Burkhard Balz, the member of the board of directors of the Deutsche Bundesbank responsible for payment transactions, drew important conclusions from the specialist discourse for the considerations on digital central bank money: “If the Eurosystem decides to issue a digital euro, it should make programmable payments for the business cases Enable the basis of the distributed ledger technology. “In the German economy, distributed ledger technology is increasingly being used as a new basic technology for digital transformation. It enables automated process handling through smart contracts in which real goods and services are represented as tokens. The advantages of this processing technique can only be fully exploited if payments are also part of the automated processing. In its final report, the working group analyzed, among other things, payments in the use cases machine-to-machine, Internet-of-Things and pay-per-use. According to the report, different payment solutions exist: conventional payment transactions, private crypto tokens and stable coins as well as digital Central bank money and tokenized commercial bank money. Since conventional payment transactions are technically incapable of integrating the payment process into smart contracts, they are reaching their limits for future needs. The need for 24/7 real-time payments, on the other hand, can already be covered with instant payments. Crypto tokens and stable coins could technically handle many DLT applications on the money side. Due to their lack of stable value and their limited interoperability, they are so far only suitable to a limited extent. In order to be able to meet the demand for programmable payment solutions, trigger solutions would also be conceivable in the short term, with which conventional payment transactions could be integrated into the processing of smart contract-based business cases . The advantage would be that it can be implemented quickly, even if a few restrictions in implementation and applicability are to be expected. However, the greatest functional benefit in the processing of programmable payments is attributed to tokenized commercial bank money and digital central bank money. The pending development of both forms of payment offers sufficient leeway to fully consider the need to implement programmable payments. Both solutions are particularly suitable as a processing solution for programmable payments due to the expected credibility of their issuers and the application within a binding legal framework. In addition, technological interoperability and robust IT infrastructures are necessary prerequisites for universal acceptance of the payment solution. The stability of the monetary value is also emphasized as a fundamental requirement for the acceptance of new payment solutions. Here is the link to the report:


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