Euro Banking Association Explores Digital Currencies in New Report

The Euro Banking Association (EBA) is an industry group for the European banking and payments industry. It has close to 200 member banks and financial institutions from Europe and the world among its ranks. The group researches the latest trends in the industry as well guides financial public policy in the region.

The report was produced by EBA’s Working Group on Electronic Alternative Payments in order to inform and advise European financial institutions about the technology how to use these emerging technologies.

The paper, which is titled “Cryptotechnologies a Major IT Innovation”, shortly touches upon  existing cryptocurrencies, like Bitcoin and Ripple, but quickly moves on to talking about what could come from the non-currency uses of Bitcoin technology, like the blockchain.

“Until now, the most salient manifestation of cryptotechnologies has been Bitcoin as a ‘cryptocurrency’ application. This development bears testimony to the innovative potential of distributed consensus ledgers. Authorities, media and various industry professionals debate its potential, legal implications and chances for survival. Yet, some believe that we have only seen the tip of the iceberg of cryptotechnologies’ true potential, which goes far beyond the application of currency and is the focus of the present paper,”
— – Euro Banking Association (EBA)

The paper then goes on to name “four actual use cases” of the technology, “existing financial services could be ‘powered by cryptotechnologies’ offering financial institutions potentially lower costs, better products and faster time to market. This paper describes four actual use cases: 1. foreign exchange/remittance, 2. real-time payments, 3. documentary trade and 4. asset servicing.”

Bitcoin has had a hard time when it comes to regulation and the existing financial industry but the underlying technology of the digital currency has had a better reception in Europe. Most recently, Swiss bank UBS announced it will be opening a innovation lab in London to explore possible uses of the blockchain. Late last year Dutch banks – ING, ABN Amro and Rabobank – confirmed to a national news station they were experimenting with Bitcoin technology.

“The fact that regulatory institutions in Europe, such as the European Banking Authority and the European Central Bank, have issued reports on this topic testifies to the relevance of cryptotechnologies,”
— – EBA

In an interview with online financial technology publication Finextra, Vincent Brennan, deputy chairman of the EBA and Chair of the EBA e-AP WG said, “Crypto-technologies are a key subject for further study for transaction banking and payment professionals, especially against the background of evolving financial infrastructures.” He added, “The paper provides a hands-on introduction to the topic. It specifically focuses on the practical potential and related implications of crypto-technologies for the transaction banking and payments area in the short to medium term.”