Central Bank Digital Currencies’ reaction to emergence of cryptos

Gulf Today, Staff Reporter

Today Giesecke+Devrient (G+D) already works in close collaboration with many central banks around the world. This is not only the case in banknote printing and currency management but also true for the topic of a digital form of money as Central Bank Digital Currencies (CBDC).

G+D offers its own solution as well as additional services such as consulting and support to countries that pursue the issuance of a CBDC to make sure that the digital currency fits the specific requirements.

 At the same time our lives become more and more connected and many consumers buy online or use digital services. So, we need a digital form of public currency that fits the needs of the consumer for easy and fast payments – this is CBDC.

This was stated by Dr Ralf Wintergerst, Chairman of the Management Board and Group CEO, Giesecke+Devrient and chair of the North Africa Middle East Initiative of German Business (NMI), during an exclusive interview with Gulf Today, adding that more and more states are investigating into the introduction of a CBDC. G+D is one of the most relevant players in the emerging ecosystem, working on paid projects for example in Ghana and winning several international CBDC challenges.

Dr Ralf Wintergerst.

“Today G+D already works in close collaboration with many central banks around the world. This is also true for the topic of CBDC. We offer additional services such as consulting and support to countries that pursue the issuance of a CBDC to make sure that the digital currency fits the requirements. This comprehensive approach also includes education and trainings.” He added.

In addition to the topic of CBDC and G+D´s involvement in this field, Gulf Today was interested to know on the company’s commitment in the Gulf region: “The UAE is an important hub in the region between Africa and Asia”, states Ralf Wintergerst. “G+D has been present in Dubai for more than 20 years. Today, it is one of the company´s most important locations worldwide, covering functions such as sales, project management, services and logistics – serving as our customer hub for the entire region and beyond. This strong presence shows our commitment to the region and our goal to keep growing. We would like to further expand this close cooperation and secure it for the long term.”

“In addition, the Gulf region itself continues to be an important business partner and market for G+D as well as other large German technology suppliers and small and medium-sized enterprises (SMEs).” he added.

Highlighting data safety, security and confidentiality, Wintergerst echoed that security and trust are without doubt the most central characteristics for Central Bank Digital Currency (CBDC) – without these attributes, they have no chance of being accepted by the population.

 “We have to assume that CBDCs will be a popular target for hacker attacks or criminals. For digital central bank currencies to be truly secure, holistic security measures at the highest level are needed. This starts from the moment a central bank creates and issues the digital currency, and extends beyond that to distribution and storage.”

“In addition, privacy aspects play an important role. A CBDC should allow anonymity up to a certain threshold – as is the case with cash - while still meeting the compliance requirements of the central bank in order to prevent money laundering or tax evasion.”

 To a question about third-party certification, he noted that “it is too early to say for sure. CBDC is not one singular product or technology but, depending on the design decisions of a Central Bank, a complex set of information technology – a platform. Certification will become increasingly important, but international standard may take a while until they are established.”

“Though some of the technology that could be used typically builds upon third party certification to ensure an agreed and proven level of security.”

 Asked if the developments of a digital version of a currency would not undermine the core business of G+D with cash and cash management, Ralf Wintergerst argued: “We regard digitalisation as a tremendous opportunity for new business development and growth for G+D. Therefore, it is part of our strategy to grow and invest in our core business and at the same time develop more and more digital business around our four playing fields – payment, connectivity, identities and digital infrastructures. And this can be quite disruptive: Let me tackle an example.”

“We invented the physical SIM some 30 years ago – this technology still exists but is being replaced by embedded SIM technology (eSIM), freeing up precious space in smartphones. We were the forerunners in the SIM technology and we repeated this with the eSIM technology a few years back. Now we are having leading market positions in this new and fully digital space, too. The same happens with a digital currency as pendant to cash, where we provide central banks a digital version of cash.”