The German Federal Ministry of Finance’s proposal to legislate for blockchain technology is an example of how German policy makers and regulators are looking to move ahead of the rest of Europe, according to Enno-Burghard Weitzel, cluster lead trade finance, Commerzbank.
“Companies and regulators are waking up, no longer is it that one is waiting for the other, but if one party thinks, ‘there is room and we need to move,’ then they start moving,” said Weitzel on the sidelines of the Sibos conference in London last week.
“This is the first step. Immediately this will increase the need for Europe to come up with an answer. Once Germany has pressed ahead, it is very likely that France will move on and that Italy will move too. There will be a movement in Europe,” he said.
On September 18, the German Federal Government announced its blockchain strategy which aims to “identify and harness blockchain’s potential while simultaneously preventing its misuse.”
“We want to be at the forefront of innovation, and we want to reinforce Germany’s position as a leading technology hub,” said Olaf Scholz, Germany’s Finance Minister in a press statement.
This isn’t the first time in recent weeks that the German government has prompted thought on European financial rules: at the beginning of September, the Ministry of Finance published two papers recommending changes to the second Markets in Financial Instruments Directive (Mifid II) and the Markets in Financial Instruments Regulation (Mifir).
Anticipating the outcome of Brexit, Weitzel said there is a strengthened position for Germany with one large country no longer being in the club, and Germany must “get used to that more important role”.
But whether a step up in activity by the country's financial regulator, BaFin, were to happen Weitzel said “it should not put any further pressure on us because we already comply with more stringent rules globally.”
“The [blockchain] topic is pressing, and Germany decided, ‘let’s go ahead, and start solving some aspects for the businesses and consumers,’” said Weitzel. “The others will definitely follow. Put simply, no one wanted to wait until there’s majority in Europe to have a European legislation as a starter.”
On September 20, Bloomberg reported that Commerzbank was looking to cut 4,300 jobs as part of a plan to close 200 of its branches. For Wetizel job losses in trade finance are an inevitable consequence of growing digitisation.
“We need to go there; we need to reduce costs. We may announce [job losses], or we may not, but still I would do exactly the same [thing].”