German Banking Industry CommitteeDigital euroTokens

Digitization of bank deposits: German Banking Industry Committee publishes new version of working paper on commercial bank money token

13.04.2023Press release
Steffen Steudel
Cornelia Schulz

German Banking Industry Committee (GBIC) has published a comprehensive working paper on the evolution of commercial bank money. It describes the design principles for a Commercial Bank Money Token (Tokenized Commercial Bank Money, CBMT) as well as the mechanisms for its issuance and multi-currency capability. 

As the digital transformation in industrial companies progresses - the keyword being Industry 4.0 - the existing and proven commercial bank money, including the associated payment transaction infrastructure, will face new challenges, says Dr. Andreas Martin, member of the Board of Managing Directors of the National Association of German Cooperative Banks (Bundesverband der Deutschen Volksbanken und Raiffeisenbanken), representative for the German banking industry. In particular, he said, extensive process automation using distributed ledger technology, smart contracts and microtransactions are enabling new use cases for industrial companies and the banking industry. In addition to value added services, it is also possible to leverage efficiency gains and thus realize cost savings. 

In order for us to jointly take advantage of the opportunities arising from a CBMT, we have dedicated ourselves to the further development of commercial bank money with the support of various European banks. Through a symbiosis with Industry 4.0 technologies, the CBMT can be seamlessly integrated into industrial processes and thus become an integral part of the value chain, Martin added. 

This would enable use cases in areas such as delivery-vs-payment, pay-per-use, smart contracts, and continuous automated payments. In addition, a Commercial Bank Money Token supports the introduction of other digital assets as well as the digitization of cross-border payments.

This Working Paper counts, besides GBIC associations, major European banks among its supporters. Different technical design options of the CBMT are currently evaluated in a real-world lab with large customers. Other credit institutions and associations, especially from the European area, are invited to join the paper as supporters or to participate in its further development.