News Flash: Programmable Money Will Need Uniform ID

German banks call for an international identity standard to underpin digital money

A European or even a global identity standard is required to support the development of “a programmable digital euro” that is interoperable with book money, according to the Bundesverband deutscher Banken that represents private commercial banks in Germany. In an online article, the Association argues that programmable digital money, whether based on conventional accounts or distributed ledger technology, will play a major role in enabling smart contracts – computer protocols that map or verify contract terms and could automatically initiate payments.

The Association says its member banks are convinced that this form of digital money will rapidly gain in importance. The use of smart contracts connected to digital money could, for example, ensure automatic remuneration of holders of rights to digital goods and support the development of the Internet of Things (IoT).

However, a uniform digital identity standard is crucial to enable crypto-based digital money to be matched precisely and reliably to natural and legal persons, the Association says. Otherwise, transactions will lack the necessary traceability and evidential basis, both for the parties directly involved and for any affected third parties, such as tax authorities.  The Association adds that the identity standard should also enable machines to be clearly matched to their legal owners, so that assets operating within the IoT can be transferred directly between machines and recorded in a manner that provides for legal certainty.

The article notes that the uniform identity standard would also need to satisfy the EU’s data protection requirements by using pseudonymisation techniques, for example, or a :self-sovereign digital identity solution.”

For more information, see the Bundesverband deutscher Banken article here