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German Policymakers Cannot Accept Facebook’s Libra

German Finance Minister Olaf Scholz has stated that Berlin will reject the emergence of parallel currencies such as Facebook’s stablecoin, Libra.

During a panel discussion in Berlin on the 17th of September, Scholz said, “We cannot accept a parallel currency,” before emphasizing, “You have to reject that clearly.”—as reported by Reuters.The German cabinet is expected to adopt a comprehensive blockchain strategy with the aim of digitally enhancing its economy. The strategy also consists of plans to tackle risky new technologies such as Libra, which German policymakers fear could become an alternative currency.

David Marcus, Head of Facebook’s Calibra, continues to reject Germany’s notion that Libra’s cryptocurrency project intends to form a new currency.At a meeting between Libra Founders and 26 global central banks Marcus stated that Libra’s purpose was to create a “better payment network” which would run on top of existing currencies. He assured the group that the creation of new money would remain “the province of sovereign nations.”

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Bank of France Becomes the First to Successfully Test Out the Digital Euro on Blockchain

The French Central Bank, Banque de France has recently successfully trialed a central bank digital currency (CBDC) – the digital euro, operating on a blockchain.

The Bank of France experimented with the use of a central bank digital currency to test a sale of securities, which was carried out by Société Générale Forge.

Banque de France launched a program of experiments to test out potential central bank digital currency (CBDC) aimed for interbank settlements. Potential participants have been invited to submit their applications to experiment with the use of a digital euro.

The three main objectives of the CBDC experiment includes identifying benefits, analyzing potential risks, and modeling as CBDC-based interbank settlement.

A maximum of ten CBDC-related applications created by groups or individuals would be selected based on “innovative nature” as a major criterion for selection. The French central bank is only accepting applications submitted by applicants within the European Union, or in a state party to the European Economic Area agreement. The results of the selection process will take place on July 10, 2020.

Banque de France is looking to trial new experiments in the coming weeks with other industry players, as the call for applications started on March 27.

Although the official announcement did not specify the exact details of the current pilot program, it did emphasize that the current pilot program is focusing on wholesale rather than the retail market of the uses of the digital euro.

In November 2019, at the Global Blockchain Congress which took place in Malaga, Spain, the European Central Bank (ECB) confirmed that it has been working on a digital euro. The Association of German Banks released a detailed plan for a crypto-based digital Euro, which will be launched by regulators.

The Dutch claims CBDC has gained more exposure in the Netherlands than other euro areas

The Dutch central bank, De Nederlandsche Bank said that it aims to become the euro leader in the development of central bank digital currencies. The report highlighted that the topic of CBDC has gained more public exposure in the Netherlands than in “several other euro area countries for several reasons.”

De Nederlandsche Bank has a positive outlook on CBDCs, as it believes that central bank money is essential to preserve as it is important for people to maintain essential trust in the monetary system.

The European Central Bank (ECB) previously expressed its interest in launching a digital Euro and stated that they have been doing theoretical research and practical experimentation. The report stated that the Netherlands could be a suitable testing ground for its testing. Even after evaluating the potential risks of CBDCs, the Dutch central bank said, “We are ready to play a leading role.”

ECB President Lagarde: Digital Euro CBDC Will Complement Not Substitute Cash

Christine Lagarde, President of the European Central Bank (ECB), said that a CBDC or digital euro would most likely work in tandem with fiat currency, not replace it.

The central bank digital currency (CBDC) being developed by the European Union will most likely not fully replace the euro according to ECB President Christine Lagarde.

“A digital euro could be a complement to, not a substitute for cash,” said Lagarde speaking at a virtual meeting of the Franco-German Parliamentary Assembly on Sept. 21. Lagarde said that while the ECB was exploring and assessing the risks of a CBDC, it was unlikely it would ever fully replace fiat currency.

Lagarde said:

“It could provide an alternative to private digital currencies and ensure that sovereign money remains at the core of European payment systems.”

On Sept.10, during an online conference with the Deutsche Bundesbank, President Lagarde said that consumer preferences have seen an increase in digital contactless payments, with Europeans taking to online platforms for their retail needs during the pandemic. With the digital revolution at our footsteps, “more than four in five Europeans regularly use the internet, up from one in five two decades ago,” said Lagarde. Global payments have been increasingly on the surge, as the pandemic has driven the digitization trend forward.

The ECB President also said that a taskforce to study the risks and potential effects of a CBDC would be announced this month, but that the European Union had not reached consensus on the introduction of a digital euro.

Euro Money Printer Goes Brrr

On Sept 10, the European Central Bank also announced it would not alter its interest rates and COVID-19 stimulus programs despite a strong euro—which Bitcoin billionaire Tyler Winklevoss called a “powerful advertisement for Bitcoin.”

The ECB stimulus money printing and interest-free lending to businesses appears set to continue as it announced it would not be making any immediate changes to raise inflation or to alter its Pandemic relief program which remains at a total of 1.35 trillion euros.

Bitcoin billionaire Tyler Winklevoss was extremely critical of the ECB’s announcement—to continue to keep refinancing operations, marginal lending facility and deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively.

Winklevoss said:

“The European Central Bank’s refinancing rate is 0% and its deposit rate is -.5%. This means it is free to borrow money, but actually costs you money to save. Thinking face This is both a potent recipe for inflation and powerful advertisement for #Bitcoin.”

USDC Issuer Circle to Launch Euro-Backed Stablecoin

Circle Internet Financial announced on Thursday that it plans to launch a Euro stablecoin (EUROC), by the end of the month, backed by the single European currency.

The launch is part of efforts by the issuer of the stablecoin USD Coin (USDC) to fulfil user demand and embrace competition as rivals such as Tether and Malta-based Stasis, have leady issued their euro-backed stablecoins EURt and EURS respectively.

Tether is the issuer of the largest dollar-pegged coin, USDT, which has a market cap of more than $70 billion compared with Circle’s USDC whose market capitalization stands at $54 billion.

Circle plans to launch the Euro Coin on the Ethereum blockchain on June 30 as an ERC-20 standard token. The global crypto finance company said that additional blockchains will support the stablecoin later this year.

Circle disclosed that after the launch several exchanges including Anchorage Digital, Binance.US, Bitstamp, FTX, Huobi Global, Ledger, and MetaMask Institutional will support the Euro stablecoin.

EUROC will be fully backed by euro-denominated reserves held in the custody of financial institutions that fall within the U.S. jurisdictions, the company said.

Silvergate Bank, a crypto bank based in California, is one of the US-based banking institutions entrusted with the issuance of the Euro Coin. EUROC stablecoin will initially be only accessible via Silvergate’s Euro SEN network, which requires potential customers to have an active banking relationship with the bank.

Once trading on exchanges is launched, people and businesses will be able to trade for Euro Coin and withdraw EUROC from exchanges and put it in Ethereum-compatible wallets, the company said.

Digital Assets Markets Spurring Demand

The launch of Circle’s EUROC stablecoin shows that demand for a euro-based product is rising. Coin metrics data indicates that the use of USD-denominated stablecoins is significantly higher than euro-based stablecoins in European markets.

Many European participants in the digital assets sector use USD-based stablecoin products because of their greater liquidity.

However, since Europe has the largest cryptocurrency economy in the world, there are many reasons to continue to push European market participants to seek to use euro-based stablecoins.

As European financial institutions and institutional investors continue entering the digital asset market, they are getting increasing interest in using euro-based stablecoins.

Since custody and trading services for various DeFi tokens are provided by European banks, there is the likelihood that this is a contributing factor leading to higher demand for euro-based stablecoin products.

This is especially true with European participants in the Forex market accessing DeFi products. A euro stablecoin is preferred as DeFi users are subject to FX risk when they use a USD stablecoin.

CME Group to Launch Euro-Denominated Bitcoin, Ether Futures on August 29

CME Group, the US leading and most diverse derivatives marketplace, announced on Thursday that it will launch Bitcoin Euro and Ether Euro futures on August 29. The move is part of CME’s efforts to expand its cryptocurrency derivatives offering services.

The financial derivatives exchange termed the launch as important as enabling Bitcoin users to trade Euro-dominated Bitcoin (BTC) and Ether (ETH) futures contracts on the regulated exchange.

Tim McCourt, Global Head of Equity and FX Products, CME Group, talked about the development: “Ongoing uncertainty in cryptocurrency markets, along with the robust growth and deep liquidity of our existing Bitcoin and Ether futures, is creating an increased demand for risk management solutions by institutional investors outside the U.S. Our Bitcoin Euro and Ether Euro futures contracts will provide clients with more precise tools to trade and hedge exposure to the two largest cryptocurrencies by market cap.”

CME will unveil Euro-denominated Bitcoin and Ether futures to help meet the rising demand for regulated and expanding, non-USD crypto derivatives.

According to CME, offerings of Euro-denominated Bitcoin and Ether futures contracts could accelerate increasing demand for crypto products from institutional investors.

The products will provide crypto derivative alternatives because the euro, the official currency of 19 out of 27 EU member countries, is the second-most-desired currency in global currency reserves.

CME designed the Bitcoin Euro and Ether Euro futures contracts to match their U.S. dollar-denominated counterparts.

The derivative exchange stated that it will size Bitcoin Euro and Ether Euro futures at five Bitcoins and 50 Ethers per contract. Such new contracts will be cash-settled, based on the CME CF Bitcoin-Euro Reference Rate and CME CF Ether-Euro Reference Rate, which serve as once-a-day reference rates of the euro-denominated price of Bitcoin and Ether.

Rising Infrastructure for The Crypto Investor

CME’s Bitcoin Euro and Ether Euro futures are the latest investment products to be launched tied to a cryptocurrency.

In March, CME launched Bitcoin and Ether options on the micro futures contracts of the two largest cryptocurrencies by market capitalization: Bitcoin (BTCUSD) and Ether (ETHUSD).

Last year, the exchange witnessed interest in crypto assets from retail investors, especially Millennials and Gen Zs, reaching new heights.

That was the part of the reason that led CME, in March this year, to launch micro futures to offer more affordable options for investors seeking to gain exposure to Bitcoin and Ether derivative products.

And so far, the company has continued to expand its suite of cryptocurrency derivatives offerings further.

In October last year, the ProShares Bitcoin Strategy ETF (BITO), the first ETF linked to Bitcoin, started trading, providing investors with the opportunity to gain exposure to Bitcoin returns in a convenient, liquid and transparent manner.

Shortly afterwards, several similar Bitcoin ETFs unveiled their trading services which track the future price of the coin.

Circle to Introduce Euro Coin and Cross-Chain Transfer Protocol to Solana in Early 2023

USD coin issuer and digital financial technology firm Circle is now set to expand its Euro Coin and cross-chain transfer protocol to the Solana ecosystem in the first half of 2023.

The Euro Coin is a euro-backed stablecoin issued by Circle in June. In contrast with its counterpart USDC coin, which is pegged to dollars, the Euro Coin is pegged to the Euro. Currently, the Euro coin is live on the Ethereum blockchain, and by Q1 2023, it will also be live on the Solana blockchain.

According to Sheraz Shere, Head of Payments at Solana Labs, the launch of the Euro coin on Solana creates new use cases for instant FX, layout optionality for traders with a new base currency, as well as allow the lending and borrowing of Euro Coin on a blockchain. The Euro coin will be available alongside USDC as a payment currency in Solana Pay.

Exchanges such as FTX will add support deposits, withdrawals, and trading of Euro Coin when it goes live on Solana. Additionally, Solana-based DeFi (Decentralized finance) protocols such as Raydium and Solena have also shown interest in supporting the stablecoin when it launches, according to Circle.

Furthermore, aside from the Euro Coin, another project Circle will be launching on the Solana blockchain is its cross-chain transfer protocol which was initially announced in September. The protocol would go live at the beginning of 2023 on Ethereum and Avalanche, then expand to Solana in the first half of 2023.

Cross-chain transfer protocol allows the native transfer of USDC across different blockchains instead of using wrapped tokens. Interoperability platform Wormhole plans to support the Cross-chain transfer protocol implementation once it’s live on the Solana blockchain.

Speaking of Circle, the firm recently revealed it has set up a new reserve fund dubbed the Circle Reserve Funds with BlackRock to help manage its stablecoin’s reserves.

Digital Euro May Have Transaction Limits for Retail Users

With the European Central Bank (ECB) now developing the prototype for its Central Bank Digital Currency (CBDC) otherwise known as the Digital Euro, more details are now surfacing based on its potential operational dynamics.

Speaking recently at the “Towards a legislative framework enabling a digital euro” conference hosted by the European Commission (EC), Fabio Panetta, a board member of the ECB said the bank may impose some restrictive limits on transactions for the retail individual users.

While Panetta acknowledged that the ECB has not made any final decision on what the limit will be, he said €3,000 is a good example of a limit the bank can impose on the Digital Euro as a store of value. He went on to say that the total number of transactions that can be done by individuals may also be capped at 1,000 per month.

“If we give access to a means of payment, which is relatively limited, there are no transaction costs because you only need to have a smartphone,” Panetta said, “There will be risks that people could use this possibility to move, for example, their deposits of other banks or their money out of financial intermediates.”

The ECB board member also highlighted on an important subject regarding the Digital Euro and how it will co-exist with fiat. According to him, both versions of the Euro will complement each other to make for a robust financial ecosystem within the bloc.

“Digital euro would be an additional option for retail payment — not a challenge to the function of the financial system,” he said confirming that the new money is not designed to replace cash, a position that echoes similar words from ECB President Christine Lagarde.

Other Central Banks have maintained this position, noting that their CBDC will not displace cash nor make them obsolete. This argument brings a lot of doubt considering the wide embrace of people to the digital economy and the financial evolution which has largely relegated cash in some countries.