Efficient and secure payment systems are the foundation of a stable financial system. The Bundesbank secures and monitors cashless payments in Germany as a financial centre, provides settlement and clearing services and plays an active role in the further development of the single European payment system.

What are the requirements that a digital euro needs to meet? This is a question explored in the latest edition of the Bundesbank’s Monthly Report. After outlining the opportunities and risks presented by digital money, the Bank’s experts conclude that any solutions will need to be well-designed, secure and convenient.

According to Bundesbank President Jens Weidmann, central banks should beware of crowding out private payment solutions and should play a supportive role instead. Mr Weidmann pointed out that competition and regulation are essential for a good market outcome. As central banks provide the backbone of the payment system, they need to be at the cutting edge of technology, he explained. This, he emphasised to participants of a Bundesbank virtual conference, includes working on central bank digital currency.

With the second Payment Services Directive (PSD2), not only credit institutions, but also third-party payment service providers are able to offer their own account services.

On business day 29 October 2018 the Danish krone successfully became the first foreign currency to be made available for settlement in TARGET2-Securities (T2S).

In the latest Monthly Report, the Bundesbank’s payment specialists look at distributed ledger technology (DLT).