The Digital Programmable Euro, Libra and CBDC: Implications for European Banks

33 Pages Posted: 5 Sep 2020

See all articles by Philipp G. Sandner

Philipp G. Sandner

Frankfurt School of Finance & Management

Jonas Gross

Frankfurt School of Finance & Management gemeinnützige GmbH; University of Bayreuth

Lena Grale

Frankfurt School of Finance & Management gemeinnützige GmbH

Philipp Schulden

Frankfurt School of Finance & Management gemeinnützige GmbH

Date Written: July 29, 2020

Abstract

Existing payment systems get more and more disrupted. As a consequence of the global trend of digitizing payments and generating new business models from the use of blockchain-based digital programmable money, several new payment initiatives have been announced recently. Besides “classical” crypto assets, also stablecoins become increasingly important. The announcement of the Facebook-initiated Libra stablecoin is mainly perceived as a game-changer for the financial sector. Today, also central banks discuss the introduction of their own digital currencies, so-called CBDCs. To date, these payment innovations are not sufficiently discussed and analyzed from the perspective of different sectors and industries, as its implications remain unclear since most initiatives have not yet been introduced. At this point, the literature does not sufficiently discuss the implications of these innovations on the financial sector. This paper sheds light on the perception of these payment initiatives by interviewing more than 50 senior experts. In this study, we analyze the impact of digital programmable Euro initiatives, such as the Libra stablecoin, and CBDCs, on banks. We find that both Libra and a Euro CBDC might heavily affect European banks. Experts fear that large-scale financial disintermediation of the financial sector could take place, and digital bank runs could be triggered. Besides these risks, our findings suggest that banks also have the opportunity to develop new business models stemming from these initiatives. Therefore, Libra and a CBDC Euro should not only be seen as threats but also as opportunities.

Keywords: Central bank digital currencies, Libra, banks, digital programmable Euro

JEL Classification: E42, E52, G21

Suggested Citation

Sandner, Philipp and Gross, Jonas and Grale, Lena and Schulden, Philipp, The Digital Programmable Euro, Libra and CBDC: Implications for European Banks (July 29, 2020). Available at SSRN: https://ssrn.com/abstract=3663142 or http://dx.doi.org/10.2139/ssrn.3663142

Philipp Sandner

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

HOME PAGE: http://www.philipp-sandner.de

Jonas Gross (Contact Author)

Frankfurt School of Finance & Management gemeinnützige GmbH ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

University of Bayreuth ( email )

Universitatsstr 30
Bayreuth, D-95447
Germany

Lena Grale

Frankfurt School of Finance & Management gemeinnützige GmbH ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Philipp Schulden

Frankfurt School of Finance & Management gemeinnützige GmbH ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,056
Abstract Views
3,063
rank
24,972
PlumX Metrics