#883 Crypto Tokens & Digital Currencies

Brain Food for Pioneering Spirits: 50 euros in 2011 versus roughly 2 million euros today — what does that gap actually teach us about pioneering spirit, and about the difference between a currency and a speculation instrument? In Room #883 of the Deep Talk Club, under our overarching theme “Pioneering Spirit with brAIn,” the group digs into why Bitcoin was never meant to be a currency, a client’s €50,000 crypto-loss loan, the Chiemgauer regional currency next door, and what happens to banks once a central bank can issue, track, and steer every digital euro itself. Listen in on the examples that came up and the perspectives that emerged in dialogue…

Note: This session was recorded live in German as part of the Deep Talk Club, so the video above is German-language audio only. What follows is an English translation of the conversation, lightly edited for readability — the back-and-forth between the moderator and participants is preserved, but the original timestamps and speaker names have been left out.

A wonderful good morning to you all. Today we have the topic of crypto tokens and digital currencies, which we want to talk about in this exchange, and we’d like to look at what role crypto tokens and digital currencies play in the global financial system. And as some of you who joined yesterday may have already noticed, we’ve also made a distinction in the terminology — the room wasn’t just called digital currencies originally, but we’ve added crypto tokens too, to make clear that there’s a distinction here too. What exactly is behind each of these terms, how the whole thing is composed, we can gladly look at that in this exchange, and make sure we make certain distinctions too, to be able to classify this better, and maybe look at it more closely, because with digital currencies, do cryptos actually fall under that or not, and however that may be. That’s maybe something we can look at more closely today too. And then to look at what significance the whole thing has for the financial system, for the financial world, what’s actually happening right now, and how that can be thought about in interplay with all the other technologies we’ve discussed so far, in connection, to look at what effects that might have, in one direction or the other. And I’m really curious about that, and would like to open up the round, in the sense of, remember, this is a reflection space, meaning really join in and bring in various thoughts, experiences, observations you make. Maybe there’s someone who already uses one thing or another for themselves and can bring in experiences here, or through following the media, or against the backdrop of your own business background, can share one thing or another as experience here too. And with that you’re all very, very warmly invited to join in and open up this reflection space together with me. Just a reminder again that the room is being recorded, and anyone who joins automatically agrees that the whole thing gets published afterward too. We have three small room rules for anyone joining for the first time today — a reminder again, a profile photo where you’re recognizable, first and last name, and at least one sentence in your bio, and anyone who doesn’t want that for whatever reason, wants to stay anonymous, or can’t speak right now because it’s too loud in the background or something, of course also has the option to just use the chat, and then we can look at picking up one thing or another here too. Right, so I’m curious who’d like to join first this morning, and I’ll gladly mute myself now. A wonderful good morning, dear Marc. What do you say about the topic?

Good morning. I hope Jürgen joins soon too, because I can’t explain the term as well as Jürgen can. I’d like to start again with the topic of pioneering spirit, which I already mentioned recently. For me, Deep Talk makes an incredible amount of sense, or it makes sense at all to engage more deeply with things, because I already told you in this room, if I’d had more of a pioneering spirit back then, and had already been in contact with people like you, I’d be a multi-millionaire today, because in 2011, 50 euros would’ve been enough to have at least 2 million today. I checked again this morning — Bitcoin is currently valued at 23,269 euros, and that’s why it makes sense for me to pick up on things, follow them in the media, and always pay attention in the spirit of pioneering — whoa, could there be something here? Could this be interesting for me? Am I a pioneer? Do I get in somewhere? Could this be something interesting? That’s it for the start.

Yes, thank you, thank you so much. And yes, various people might have had exactly this thought in one place or another, especially when we first heard about crypto — whether that’s Bitcoin, that’s the one that really went through, so to speak, in terms of how well-known it became, and then there were others too. Today there are always more cryptos coming along too, where you might think the same thing, where of course you also don’t quite know how the developments will continue. And, well, one investment or another. But I think it’s relatively irrelevant whether it’s Bitcoin or something else at other points. Whenever new things come onto the market, appear, there are of course investment opportunities too, and they’re always opportunities and risks at the same time. That means, at that point in time, you might not yet know how it’ll develop further, and what that could mean later. In hindsight, it’s often easier to judge one thing or another, because of course you then know the developments, and know where the whole thing has developed to, in inverted commas, up to the point of observation, so to speak, and accordingly make an assessment then. That’s often easier in hindsight than in foresight. Marc, would you like to add to that, before we bring in Sabine and Layla?

Yes, exactly, I can only underline that, and I’m looking forward to new contributions now. Thanks, Yasemin.

Yes, wonderful. A wonderful good morning, dear Sabine. What do you say about the topic?

A wonderful good morning. Yes, I’d first like to disagree with Marc a bit. Of course I agree with you that if you just look at the first value, and today there are a lot of millionaires, but how many fell by the wayside on the way there? Just last week I had another construction financing client again, who had a 50,000 consumer loan. I said, what did you do there? Well, I fell into some kind of trap and did something with crypto. So the problem in this field, and I’ve been approached about this myself too, is that a lot of people do something they have absolutely no clue about, and get lured in by the promised profit. But that doesn’t actually have anything to do with crypto specifically — that’s always been the case with stock options too. It’s just that with crypto it’s even worse, because a lot of people really don’t understand it, and they just see, oh, on some trading platform, oh, I can start with 50 euros, and then they get shown a fake profit of 150 first, and that’s how they get pulled in, like into a little funnel, and eventually they even take out a loan. So crypto, the whole crypto thing, is a great thing, and where it’s applied properly it’s great too, but be careful. The second thing I wanted to say — in completely different settings there’s gambling going on too. I mean, America just noticed this, when there’s no guidelines at all in this field, look at one bank or another, because they simply reuse people’s deposits again. America has always had fewer guidelines, and it’s usually only through damage that they notice, hey, maybe something needs to be done here. Yes, that’s what I wanted to contribute at this point.

Yes, thank you, thank you so much. Let’s bring in Layla directly too, and then we can make cross-connections too. Dear Layla, a wonderful good morning. What do you say about the topic?

A wonderful good morning. Let me say, I’m terrible at math, just wanted to briefly mention that, because I have a lot of concentrated expertise here in one place. And still I’m someone who deals with money, and that’s true for a lot of people too. So when I hear crypto and digital currencies, that’s actually not as far away for me anymore as I thought. A few years ago it really was the case that, well, whether we take the introduction of the euro, we fought that tooth and nail too. I just checked this morning, because I heard this last time and didn’t believe it — 20 percent of money is cash. And I’d always heard, cash is cash. And the rest is already digital currency. So, as far as money in the world goes — please correct me if that’s not the case, because, as I said, I’m terrible at math, and I’m more of a user, I’d say, when it comes to money. And still it affects me. It affects me in that I of course think about whether I should invest. And crypto used to be really cryptic, to put it that way — you didn’t quite know if you should do something with it or not. Now terms like “trading,” which were just mentioned, and “cryptocurrency,” well, you’re kind of in the loop. So I think it’s something we’re doing now, to speak generally about it. And I notice that I can only pay with a card for a lot of things now. Next year, I just checked, and Sabine certainly knows more about this too, the digital euro is supposed to be introduced, and then we’ll only be able to pay digitally. I wanted to add on this topic — I don’t keep my money under my pillow, but I once heard that cash is actually quite good. I know there are challenges on TikTok where you make little bundles of it, and I always feel like it hurts more when I see that. And that’s something that gets lost a bit through digital currency and through crypto too, this tactile quality. And I also don’t know whether people take out this loan more easily, Sabine, if you have this feeling that you don’t really see it. So, speaking for myself, paying with my card doesn’t hurt as much. That’s why I still have respect for digital currency, and I’m curious what you all say about it. And, sorry that I’m terrible at math, but I’m a user.

Yes, wonderful, thank you, thank you so much. And I think that’ll ultimately get exciting too, once we look at this more closely. And let me just pick up a first-best definition, to get a bit closer, and maybe trigger Jürgen a bit too, to get him to join in and pick up one thing or another, to get into this differentiation. So if I just type “digital currency” into Google, and look at what comes up first, there’s a definition — the European Banking Authority, EBA, defines virtual currencies as a certain type of unregulated digital money that isn’t issued or backed by a central bank, and can be used as a means of payment. Both virtual and cryptocurrencies get created on the internet. So, I’m curious whether that might already trigger some reactions. Right. And that might’ve already triggered Jürgen. And with that I’d like to bring in Jürgen first, and then afterward give you all the opportunity to make cross-connections too. Jürgen, a wonderful good morning. What do you say about this definition?

Oh dear, Yasemin, I’d have quite a bit to say about that, but first a wonderful good morning to you all on this topic. Let me first pick up the title again, and reinterpret it a bit, and say, the two vehement, already vehement opponents in the money and capital market are lining up, namely crypto tokens and digital currencies. Because, and I’ll elaborate on this at the end maybe, the digital, so-called digital currencies, for example as the EU, the ECB, is currently testing in the second test phase, has, in my view, mind you, my opinion, quite clearly the aim of switching off these so-called crypto tokens. But I’d like to pick this up again from the terminology angle, dear Yasemin, that was the trigger, to hopefully create clarity that it’s necessary to say, no, Bitcoin isn’t a currency, or cryptocurrency. A currency is really clearly defined as the monetary constitution of a state. I really don’t want to go into details here, but the significant, or defining, feature of a currency is that it counts, in a certain area, in a state, or a union of states, for example in the USA, or in the EU, as legal tender, by law. That means the implication of this is that every debtor has the right to settle their debt toward a creditor in this currency. So there’s an obligation on the part of the creditor to accept it, to reduce the debtor’s debt, unless of course some other contractual agreement has been made. That means the currency of a state also has a certain enforcement power, namely in the relationship between debtor and creditor, and thereby also establishes rights. The second thing I want to say — that’s not the case with Bitcoin. It hasn’t been prescribed and agreed as legal tender anywhere so far. As far as I know, it’s permitted in some countries in South America as a supplement to the current currency, but not as the reference currency. The second essential point, and this is much more compelling for me, is that Bitcoin never wanted to be a currency, in the sense of its inventor Nakamoto, because exactly the reason for anchoring Bitcoin on the blockchain, using a peer-to-peer connection, was precisely to switch off the intermediary, the transmitter, in this case the banks, and give us the option that I could say to Marc, Marc, deliver me 1000 caps, and I’ll pay you 1000 euros for it, and I don’t need any banks for that. So basically the original intention of Nakamoto was to keep this within an agreement between A and B, from Marc to Jürgen, and to exclude intermediaries — banks, and of course national banks, and an ECB, that mine this money in the first place. And then I get to the third point, which is also really essential. This mining. I might need to explain that a bit — mining is this so-called mining process. It works by some people, with high-performance computers, being able to solve highly mathematical, cryptic problems. They get compensated for this with cryptos. Setting aside, for a moment, the performance that establishes the creation of money — the cryptocurrency was limited, from the outset limited, to a maximum of 21 million bitcoins, and now this gets a bit tangential, sorry, I need to go into economics. A price, expressed in money, creates an intermediary function between supply and demand. Supply and demand in an economy vary, I think that’s clear to everyone, based on the quantity offered, or the quality associated with it. Supply and demand are therefore flow variables, variables of change. So, if I insert an intermediary in between, money, it of course needs to be able to adapt to this reciprocal relationship. And this adaptation happens in monetary policy through two essential instruments that fall within the ECB’s competence, namely controlling the velocity of money circulation and the money supply. If that, and let me get this jab in, if that hasn’t worked so well in recent years, then you get either inflation or deflation. That means money becomes worth less, or worth more, because the currency guardian wasn’t able to keep monetary value stability constant through these two control components, velocity and quantity. So, now if you look at Bitcoin, imagine the scenario, and there are already projections for this, I think in the 2040s, that there’ll be no more additional Bitcoin at some point. That means I can no longer control the differing development between supply and demand through quantity. And to make that a bit clearer — if, in anticipation of that, some really clever and capital-powerful people concentrate a bunch of Bitcoin in their hands, then they hold the compensation function, or basically also the transfer possibility between supply and demand, in a few hands. That means they withdraw from the market the very possibility of enabling an exchange between supply and demand at all. So, that was pretty long. I ask for your patience, but I hope I’ve made clear to one person or another how important it is to differentiate on this topic, and to get on Don Quixote’s horse with me and say, no, Bitcoin is not a currency, because, dot dot dot, and it has, as some of you already clearly laid out, increasingly become a speculation project, whether that was the intention from outside or not, I don’t know, and our tax laws and our legal system don’t define Bitcoin as money, but as a financial instrument, like a stock, like gold, or like a swap or similar. Thank you for listening so long, and I’m happy to answer follow-up questions.

Yes, wonderful, thank you, thank you so much, and I actually have two questions that came up for me, which I’d like to tie in directly here too, before we make the cross-connections. On one hand, we could say that Bitcoins also get used as a means of exchange. But that’s not just the case with Bitcoins, so cryptos in general, but basically you can use all kinds of things as a means of exchange that aren’t simultaneously a currency, and that could also be limited, and so on. That’s maybe a follow-up question on that, and in addition, maybe to open up one more thing, since you’ve already made all these distinctions — maybe to pick up this aspect of CBDCs too, so digital central bank money, and give us a brief insight into that, dear Jürgen.

Very gladly. First question, you might have seen it, thumbs up. Yes, it’s a means of exchange. I can also, let’s stick with an example with Marc, if we agree, let’s say, we exchange seashells, that’s basically the same thing. So, first question, quite clear. The question, and I think it’s great that you’re now coming to speak about the second unit alongside crypto tokens, the digital currency. That’s basically, as the expression already says, nothing other than a digitalization, a provision of a currency via digital media — that means the digital euro, which is supposed to come, and which will certainly come too, doesn’t do anything other than, well, it does a lot, but essentially it doesn’t do anything other than give an expression of money an additional form, namely in digital form, in the form of a wallet. This wallet, which sits somewhere. Then we’d have a digital euro in the wallet, and we’d still have our coins and our bills too. That’s at least, for now, the EU’s creed, though over time I don’t consider that sustainable. And this digital currency has, and this is really important, and that’s why “currency” again, the same, for example, protective function. That’s another topic in the comparison between Bitcoin and a currency. The protective function, for example, regarding deposit insurance. So a Bitcoin has no deposit insurance. If you have Bitcoin stored somewhere and it’s gone, à fonds perdu, then it’s gone. If you have your money parked at a corresponding credit institution today, then this money is subject to, or benefits from, deposit insurance, both from the government side, and from the private or cooperative or savings bank side, there are complementary positions on that too. But all in all, again, the digital currency is an additional type of the already existing currency, which transfers its availability into the digital world. I hope I’ve expressed myself clearly enough.

Yes, great, thank you, thank you so much, and I’m curious now what Marc, Sabine, and Layla say about that. Who’d like to tie in here? Maybe further questions come up for you, or further impulses or additions you’d like to make. Marc, Sabine, Layla, would anyone like to tie in?

I have to admit, Jürgen, thank you for your explanations, I’m a bit overwhelmed now. There are so many terms, and it’s really, really exhausting to follow that. But I’m asking myself, and this is a fundamental question, we’ve had this before, not whether we see it as a currency, so whether it’s secured or not, but if we look at the value of Bitcoin, and also the value of money — money actually only has value because we believe in money. If I give Yasemin 100 euros, then it says 100 euros on it, and Yasemin can buy something with the 100 euros, because whoever accepts it sees that it says 100 on it. The 100-euro bill will probably be worth just as much, in terms of value, as a 10-euro bill, or a 5-dollar bill, except for what you just explained to me, that the whole thing is backed by the bank. I understand this process. But what about it if people come together and say, okay, I now trust some other value, so I take a different means of payment. And that’s not even the question of whether it’s secured — I’ve understood all these processes — but simply, does something like this establish itself as a means of payment, if the two of us agree that we trust it, knowingly aware that it’s not secured, that the system could collapse? Because it offers the possibility of barter, and I also know that banks like this, and that we, as you explained, are secured too. But the question is whether it can really count as a means of payment, however that may be, even if it’s not secured.

Yes, Sabine, go ahead.

Yes, I can well imagine that happening, because then we wouldn’t have the speculation behind it. I think the problem with crypto is that it’s supposed to be a means of payment on one hand, and a speculation instrument on the other, and that’s why we get this rollercoaster ride, and I also think part of the reason is that there are simply too many players involved, and they don’t necessarily all have to be on the good side, but also on the other side, on board. You noticed this — when a crypto exchange started wobbling, there was an immediate effect on that side too, which you also see today when you hear Wirecard is going bankrupt, you see the same thing with the stock, because people simply go in and out, and that probably won’t be the case with a digital currency in the same way. But what we’ve also seen in the past is that the moment everything’s in recession and so on, people suddenly buy a lot more gold, because people know, gold is gold. That fluctuates a bit too, but not as immensely. You at least have the gold value behind it, and we don’t have that with crypto and with digital currency. So I think, for me, it would be important that this gets separated a bit. A digital currency shouldn’t become a speculation instrument — I mean, of course it fluctuates, that’s clear, it’ll fluctuate against the dollar, or the renminbi, or whatever else exists in the world, but for us it needs to have a certain stability as a currency, and that probably can only happen if it’s backed by an ECB or something similar, where the average citizen also has their trust in it. Whether that’s justified is another matter.

Yes, thank you, thank you so much. Layla wanted to tie in too, and then we can gladly see what Jürgen has to say about that too. Layla, what are your thoughts on that?

Well, what Sabine meant with the average citizen, and talked about gold, I felt addressed by that. Jürgen, that was a great explanation, and I also know this, that, well, for me the blinds kind of come down a bit. I don’t know if the average person feels the same way. That doesn’t mean I’m not interested in it, it just means my understanding of it isn’t that great. But if we talk about things like stability and inflation, then I have to say, okay, I was in history class, I know what inflation does, I know what inflation is doing right now, and I know that when I go grocery shopping for one person, I pay 80 to 100 euros in some cases for food, which I wouldn’t have paid before, and that’s actually at the discount store. I know olive oil is running out, and I know I’m talking about things now that might not really have much to do with crypto and digital currency, but the connection I’d like to make is simply this stability. And I think this stability, that’s also what I meant earlier when I said, well, cash is truth, or something. I don’t know if that’s really true. I have the feeling that people who own land, people who simply have assets that have stability, that they’re coming back into fashion now, despite digital currencies, because digital currencies maybe have a certain uncertainty too. I said you don’t see it, and so these are just amounts moving through the account. That’s through my debit card. And that’s something I’d be really burning to know, whether there are two movements happening. I do have the feeling that, if the possibility exists, that those who invest also like to invest in land or things like that. And I hope I’ve found my way back to the topic, and don’t come across as a total dilettante now, because I can handle money.

Yes, thank you, thank you so much. Jürgen, maybe you’d like to tie in directly here, before I add something, or formulate more questions to the round.

I’d like to tie in directly with Layla. Thank you for your compliment, dear Layla. But I’d like to tie in with the question that, in my view, is still unanswered in the room, from Marc. If I understood correctly, there was a question about whether, if I agree on some medium of exchange, I can use this as acceptable, and possibly even cover my entire transactions and living needs with it under certain circumstances. Yes, dear Marc, that’s actually reality — right outside my front door, in fact. We have something here in the Chiemgau region called the Chiemgauer. That’s a regional currency that was introduced in the early 2000s, I think as a reaction to the introduction of the euro, in Prien am Chiemsee. And in bill form — I’m not sure about coins, I don’t think there are coins, because the right to mint coins lies with the federal government — but there are bills, or a voucher might be a better term, that get put into circulation, and with these bills, which have a certain value, just like dollars against euros, you can exchange them, and using these bills you can shop locally in the Chiemgau region at selected merchants and shops, and the merchant of course can then buy from their suppliers with it too, and that’s certainly the case in other regional areas too — I don’t have knowledge of that, but I’ve seen the Chiemgauer myself, there’s a parallel currency there, and the nature of a currency, why and for what reason this currency exists at all, is because the people involved with it and the users trust each other. Because money, and basically currency as a subset of money, has no value in itself. The value only comes from the supply and demand side. Money’s only job is to provide the service of creating balance, and preserve a value over a certain distance, namely if you get your money for your service, your work, that you can be sure the day after, or the day after that, that you’ll get a corresponding counter-value for exactly this money from your baker, from your butcher, or from your travel provider. That’s basically agreement-free — we among ourselves could also agree, let’s make a currency, and see, maybe someone else will join too. I hope I’ve answered your question reasonably well, dear Marc.

Yes, wonderful, thank you, thank you so much. And it becomes clear here, of course, that it’s relatively complex, and we could probably make several rooms out of this. Basically it makes sense, I think, in this context, to also look, with currencies in general, and now if we talk about fiat money or something, into this development, or history, a bit, to be able to classify these connections a bit better too. So originally various things really got used as a means of exchange, and then, viewed historically over time, money developed, starting with shells, so-called cowrie shells, and so on. Basically, if you look more closely, money is nothing other than a government assurance, so to speak, a promise. So basically we’re talking about nothing other than, first of all, paper that’s been printed. Of course, certain things get done, in inverted commas, from the government side, so there’s no counterfeiting and so on, but originally people also had gold backing it. The issue was, to some extent, that if you traded with gold, you could only carry it around with yourself up to a certain degree, and that’s why they had gold deposited as deposit insurance, and instead used paper, in inverted commas, and coins, because that’s easier to transport. Jürgen, feel free to tie in right after this. And today it’s the case that there’s no gold backing behind it anymore. And there we get to the connection with inflation and so on and so forth. That means, especially in times like now, for example during Corona, huge amounts of money get printed too. And that raises the question, I think, of, well, there’s a government promise behind it, in inverted commas, but you could discuss how secure that actually is. And if we look historically at how currencies have developed and so on, it’s not out of the question that one thing or another might get replaced over time, by something new. That’s one thing. And the other thing is, if we look at certain developments too — a lot of people will remember the images on TV, when Greece had these really massive challenges, where people could no longer withdraw money from banks, and so on and so forth. That shows that everything might not be as stable as it first appears, possibly. Jürgen, would you like to tie in here too?

Very gladly, because that’s a key topic, I think, for understanding too. I have to disagree with you, dear Yasemin. The ECB bill, the euro bill, isn’t a promise. It’s a debt security. A lot of people don’t know this — we hold debt securities in our hands with our banknotes. That means we have a claim right against the issuer of a debt security, in this case the ECB, to be able to convert or realize this money, or this banknote, at this value. And that’s why the ECB is the currency guardian, because it’s interested in this debt of theirs being held, in terms of value, within a certain range — inflation, deflation. That means, the essential difference to gold, which you mentioned, is, if you translate that, I can’t have a debt toward a mineral. And especially a mineral that, according to the current state of scientific knowledge, will eventually be exhausted on this Earth. And a mineral that, throughout history, has largely been in very few hands — especially the USA, also Germany, I think even second or third place, and especially Russia. That’s why they moved away from this gold standard, because they wanted, and the goal was, to remove this ultimate reliance of trust on a mineral, from the explanations I gave earlier, between the balancing function between supply and demand. And this got transferred, sorry, this got transferred into a trust position toward someone acting as the guardian over this currency going forward. So that was a really important step for us, toward getting a different understanding of money and currency, and the essential thing, from my point of view, is, again, for understanding currency, it’s a claim right we hold in our hands with our euro bills, and it’s a government regulation, which gets perceived with a negative connotation, but I have someone watching over it, to ensure a certain continuity, and that was Layla’s topic, a certain continuity between supply and demand is guaranteed. That wouldn’t be the case with any other precious metal or means of exchange. Thank you.

Let me formulate a direct follow-up question to that, and then I’d like Marc to tie in too, because you said, debt security and claim right toward the ECB. And how does that relate then to deposit insurance, for example with banks? There it’s capped at 100,000 euros, for example. Maybe you can tie in there too, because I’d say, well, I might have a claim right, but the moment I store my money at a bank, for example, then there’s only the deposit insurance left, and that’s clearly defined too. Maybe you’d like to build that bridge, Jürgen?

Deposit insurance exists because this money basically doesn’t disappear, but through a bank’s insolvency it gets managed, or used, in a different way, through different channels. So basically it possibly even gets, under certain circumstances even with a criminal background, redirected to a different purpose. So basically that’s a security, the deposit insurance, toward the respective bank that takes on custody of this money for me, and hopefully doesn’t misuse it. But it’s not a security toward a currency, which gets reinsured by the issuer, the ECB, through money and money-circulation control. I hope I’ve been able to explain that reasonably well. These are two really essential, two different things. Deposit insurance is protection against, all the way to, criminal fallout, banks staying solvent, and the other thing is preserving the value of the currency through the currency guardian, through monetary and currency policy.

Yes, thank you, thank you so much, and Sabine, I saw you wanted to tie in on this too, possibly directly. So I’d like to give Sabine the floor first, then, because I assume Marc might tie in at a different point, I’ll give him the opportunity again then. Sabine.

Yes, I wanted to say something about the deposit insurance fund too. It’s not just 100,000 — it’s actually different individually at different banks. But you also have to say, what’s actually behind this security wasn’t even sustainable at all. So, if you take Deutsche Bank or something, that was so much, if the bank had really gone bankrupt, which nobody would’ve believed, that could never have been paid out. It’s always been based on a certain quota of the bank’s own capital, and that got scaled back recently, but it’s still immense. But the moment a bank like that really went bankrupt, that wouldn’t be feasible at all. So the deposit insurance fund is, ultimately, a means of trust for the population, to keep their money at the bank. That’s supposed to go in that direction too. I don’t know if it was in England, there was a bank that was a bit shaky, and the next morning everyone was standing in front of the door wanting to take out their cash. And that’s of course what it’s supposed to prevent. But well, that’s what I wanted to say about that.

Yes, thank you, thank you so much. And keeping an eye on the time, I’d like to give Marc the opportunity again now, and then let’s look, also regarding the opening question, we’ve picked up several aspects now, at how we can build the bridge to this question of crypto tokens and digital currencies in the global financial system. What role does the whole thing play, or what can we pick up under this umbrella of Pioneering Spirit with Brain now, with all these distinctions we’ve made, and say about it, at this point.

Yes, thank you, thank you so much, Yasemin. My point would have been the deposit insurance too. I also have a question that goes a bit directly to Jürgen. With digital currency, crypto tokens, I need to read carefully — could there also be an interest that it doesn’t become a means of payment, and specifically for the reason that Germany, among others, is also money laundering paradise number one? About 100 billion gets laundered in euros, just in Germany, we’re only talking about Germany, and from what I’ve read about digital payment options in Bitcoin, in a precise investigation you can always exactly trace where the Bitcoin was, where it is now, where it came from. That of course doesn’t happen with cash. So it’s not just the question, will we get digital currency and will we get cryptos or Bitcoins or whatever, but who might also have an interest in us not getting that, because 100 billion sounds, to me, even though it’s illegal, like a pretty good business.

Thank you, Marc. Would you like to answer that directly?

Thanks, dear Marc. The position, or argument, of money laundering is one of the leading arguments for the introduction of digital currency. Mind you, digital currency. Money laundering based on blockchain technology, in the application form of a Bitcoin — I won’t go out on a limb here to say that this doesn’t open the doors and gates wide for it. In any case, I’m of the opinion that it definitely doesn’t put a stop to it. There are various reasons for that, but that would certainly go too far now. But that’s exactly the point — you hit exactly the point, dear Marc, for the positive selling, let’s call it that, of digital currency, that through this digitalization, and now we come to the point I put a big question mark on earlier, we get a handle on it, as an accompaniment, or maybe at some point as a replacement, for a cash currency. And that’s definitely possible, based on the current state of things. Well, you just have to think about it — that’s how the considerations are currently running, in the second test phase too. There’ll be a central digital wallet, and not with your bank anymore, but with the ECB. And if I spin the whole thing to its conclusion, then your supplier, or your customer, will operate this wallet at the ECB, and you’ll draw from this wallet, and with every purchase, there’s no more cash, you’ll communicate directly with this wallet, and so on. All wonderfully safe, all traceable. Exactly, and that’s the crux of the matter. All traceable, on the ECB’s side. There’ll be no more room left for any digital euro to disappear into nowhere, because there’s no other alternative form of representation for money anymore, namely only digital, and no more paper money, dear Layla, as you said — you said you don’t keep it under your pillow, sorry, you don’t keep it under your pillow. No, that won’t exist anymore. Positive and negative. And let me say one more thing about pioneering spirits — a fitting topic for pioneering spirits, dear Yasemin, because a Nakamoto, through this connection of Bitcoin with blockchain technology, set a lot of things in motion that people really had to think through profoundly, and still do. Especially this peer-to-peer connection, where all alarm bells are currently ringing at banks, because their business model might become obsolete in the near future, under certain circumstances. Thank you for listening.

Yes, wonderful, thank you, thank you so much. I’m totally with you that these developments have ultimately led to setting a lot of things in motion, and maybe developing a kind of pressure too, so that a lot of discussions have broken out, a lot of developments have taken place, and ultimately, in terms of effects, it makes sense to look more closely at this too. That means, you also said, for example, that money laundering is the argument for why digital currencies are increasingly being considered too, or why this development will probably come. That’s already foreseeable, basically. Currently still, in inverted commas, I’ll say, with the promise or plan, not to completely replace cash. But we often know how it goes with promises. Those are sometimes just approximations, to steer things step by step in a certain direction, and prepare people for it too. And once the acceptance is there — we just experienced this during the Corona period, how quickly shops suddenly switched, and said, for safety reasons, health aspects and so on, let’s just accept digital only. And, well, people followed along relatively quickly too, out of fear, for example, of how this relates to infections and so on, and maybe it’s actually better to not pay with cash, but digitally. And now you can look at this from various aspects. On one hand you could say, well, regarding money laundering, it might make sense, you could initially assume it curbs it, but doesn’t fully rule it out, from my point of view. So money laundering — of course we might not have real money anymore to launder with, but people are inventive. That means, and here we’re back at means of exchange, there’ll always be other possibilities that open up again, that then get used again on parallel tracks, in inverted commas — you’ll have to see how that develops. So one question is, can you really eliminate it that way? Question mark. And then, there’s also, and here we’re at the role and significance, not just looking at it in a financial context, but also from an individual and societal level, what does that mean, in terms of effect? And that’s clearly, from my point of view, the direction we’re currently developing in, that maybe in a first step we say, digital currency gets introduced, and cash still exists. But we also see that there’s already discussion about how much cash you should be allowed to have, and so on and so forth, whether there shouldn’t be restrictions here, and so on. And those are all indicators, from my point of view, that clearly speak for the fact that, sooner or later, cash will completely disappear, that basically that’s already the plan behind it, viewed long-term. And then the question arises, what does that mean, as a consequence, if a central authority, in this case the ECB, so to speak, not only provides “security,” but at the same time also creates insecurities from it. Because if my money gets cut off somewhere, or something like that, because it’s all digital, then I’d have challenges here, and how does it continue then? So, will I not become completely transparent on one hand, and on the other hand, what happens if accusations or something come up that maybe aren’t yet sustainable, or haven’t been conclusively processed, or, and I, because everything’s in digital form, suddenly lose access to it in one place or another. Including to money as such, not just in the sense of daily expenses or something, but if everything gets steered through the ECB, and it’s no longer stored somewhere “privately,” then that ultimately concerns so-called assets too, in that case. I’m curious what you all say about that. Would anyone like to tie in? Marc, Sabine, Layla, Jürgen?

Yes, gladly, Jürgen. Yes, that’s a really important point you raised. I’m completely with you regarding your remarks, once acceptance is achieved, and then the next step comes. The next step, I think, has to come too, if you’re being consistent. And you can currently observe this development in the test phase of the Chinese renminbi, how, in a selected area, the central bank, and of course behind it stands the CP, steers this digital currency. And let me give just two examples of mutual dependency. That means, if the ECB, the sole guardian, once there are no more banks, and that’s the precondition, that’s the precondition in the first place, for there to be no more banks, for the ECB, or a central bank responsible for this, to tend toward an omnipotent position. Then this institution has, in a positive sense, the option to control this circulation velocity and the money supply with pinpoint accuracy. As needed, depending on how the economy develops. That means it can directively determine the value of money, according to output, gross domestic product, or the gross domestic product of a certain sector. The citizen, the user, notices this by having exactly this monetary value stability. So they get exactly what they received a few days ago, a few months ago, as a service. They get a counter-value for that. The downside of the whole thing has two positions. It controls this via the interest rate. That’s a topic we haven’t had yet. With the interest rate, which private banks or banks in general currently set, and which are also in competition with each other. Sabine can certainly say more about that. But this competition then falls away. And there’s one institution that not only controls money supply and circulation velocity with pinpoint accuracy, but through this interest rate, under certain circumstances, can control very specific purposes with pinpoint accuracy too, and say, now we need housing. Yes, now we’ll give investment loans to construction companies that keep costs low, while the interest rate for investments stays at 5%. That’s something an institution can do, once it has no more competitors. And that’s, for me, one of the biggest, the biggest downside. And that’s connected to the fact that, as a consequence, a peer-to-peer relationship, or concentration on one position, means free competition among alternative forms of investment will disappear. And that’s the direction we’re currently heading, in my view.

Thank you, thank you so much. And Sabine, I’d like to give you the opportunity here too, you’ve already signaled — and then we’ll move into today’s closing round, and you can gladly, once you’ve tied in, so to speak, brought in your contribution, also pick up your closing word already, what you’d like to underline for today. Sabine.

I’ll gladly do that. Jürgen, you’re shocking me a bit now, so I need to ask a follow-up question. For me it was clear until now, the digitalization of money is coming. We can’t really stop that, it’s just a question of when. But for me it was also clear that a parallel cash system would still continue to exist. Not in the euro area, so, well, all the cash and so on, that’s a question of time, then I see it the same way you do, that’ll disappear. But even in the past, the ECB, or others, somehow created money through debt securities and so on. Do you think all of that will disappear too? Maybe you can say something more about that, because that sounds a bit like a command economy, and I can’t quite imagine that yet either. What I wanted to say at the end, great room, great insight, especially from you too, Jürgen. What I still wanted to briefly say, I mean, everyone needs to keep an overview of what they’re getting into, because Layla said earlier that people are investing more in real estate again, because it’s supposedly safe. We see right now what’s happening with real estate prices — they’re also going up and down, currently more down than up. So there was speculation in real estate too, which wasn’t there before in that way. So, ultimately, it’s always supply and demand, and that of course gets unsettled by market conditions too, and that of course, again, not just in Germany, but globally. I mean, Yasemin, you know it, in Turkey 80 percent inflation, that’s a whole other number. Or if some country like China says, we’re not using the dollar as a reserve currency anymore, then the whole world changes. Great room. I wish you all a nice weekend. Bye.

Yes, thank you, thank you so much. And since you just mentioned Turkey too, and here, for example, people also switch currencies, to counteract inflation within their own currency, so to speak, and then switch back, so switch to more stable currencies, for example. So that’s happening accordingly too, and that’s interesting too — we haven’t touched on this aspect yet, and it certainly happens in other places too, and not just in Turkey. Jürgen, feel free to address Sabine’s question — no closing word yet please, because I’d like to give Marc and Layla the opportunity too, to tie in again, and formulate their closing word, and then see if anything else comes up, and then give you the last word for today.

Thank you, Yasemin. Thank you, Sabine, for your contribution and your question. Basically, I try to always hold back with the statement “I believe.” I don’t believe. I only look at what I can establish as fact. Regarding your question, will banks disappear — and that ties into Yasemin’s remarks — what we currently see in development, and can take as fact from what those responsible declare as their creed, that’s, for me, definitely a pointer to where the future is heading. And I base that on two positions, that banks are in a considerable danger zone — namely, right now the ECB says, with the introduction of digital currency, cash will still continue to exist. Open bracket, big question mark, close bracket. Because I ask myself, is the prevention of money laundering the only benefit of the whole thing? It could well not be. You just need to consider what the whole test phase has already cost. And the second creed is that digital currency shouldn’t be used for investment purposes. So, investment, so savings, fixed-term deposits, other forms of saving that exist, that gets used as justification to keep the status of banks intact. And I ask myself, from my limited economic perspective, why would I need to burden myself with such a network of distribution points and competitors, if I can perform this function myself? What difference does it make whether I invest my money at Deutsche Bank, at HypoVereinsbank, or at the ECB? That’s the big question mark. And mind you, I don’t believe, but I definitely see a risk in this regard, for our current banking structure, that it might become obsolete at some point through this development. Thank you. I hope I’ve answered your question.

Yes, thank you, thank you so much. And with that I’d like to give Marc and Layla the opportunity too, on one hand to make cross-connections, or formulate a question too, to then round off today with the closing word, in inverted commas. Marc, and then Layla, please.

I’ll keep it short. What a Deep Talk. Exciting to see which paths are opening up, without judging whether these are good paths or not. What I especially liked is that I didn’t consider it a conspiracy-theory room, but we talked with facts and discourse on equal footing. But I do have to honestly admit that this room really demanded extreme concentration from me, and I need to digest that first. Thank you.

Yes, wonderful, thank you, thank you so much. Layla?

Well, I notice what I can do, and I notice what I can’t do. But I also notice what I need to be able to do. And money is really important, digital currencies are important. Let me remind everyone of the introduction of the euro again, huge outcry. I think digital is good, and there we’re at the topic of education again. So I find it funny now that, I think a lot of people aren’t quite pro yet. I just wanted to briefly say, I think that also has to do with this counter-value. You said it so nicely earlier, money is a means of exchange, Yasemin. That means we’re looking for a counter-value. I just checked again — Germany, according to Der Spiegel, is 2.4 trillion euros in debt as of March. Wuppertal bought itself benches for 400,000 euros made of gold. No, all wonderful. And still I think this thing with the counter-value is good. I don’t know if I can found a currency — I think there’s government regulation there, Jürgen, that stuck in my mind from earlier. But if it’s with you all. And yes, so I’m a bit behind with my thoughts. I’m grateful to have been in school and to know what inflation is, to know what means of exchange are, to know what money is worth. And still I think it’s important that money also has a counter-value. And I don’t want to store it under my pillow. But if it’s just entirely online, I don’t know if the counter-value is always given, and what can be done with it. So it’s on me, pioneering spirit, to engage with this. Thank you for this room.

Yes, wonderful, thank you, thank you so much, and now the keyword education has come up too, and to some extent maybe that was also the financial education we’ve worked on, or dealt with, here today. Jürgen, maybe you’d like to tie in on this point too, and then also add your closing word, what you’d like to underline from your point of view for today, too.

Yes, very gladly, a key term that keeps accompanying us, of course, education. And there are also many well-known advocates who are pushing forward and saying, make the topic of money and currencies a topic in our schools. And I think that’s essentially a really essential aspect that also justifies education, namely self-responsibility, self-regulation, and self-determination. Because we all know, nothing works without money. That’s just how it is, because behind it stands desire, and a service, and a certain security, which gets expressed in this value, and making this clear from earliest childhood on, you could say, handling money and understanding what’s actually behind it would be, for me, an elementary building block for an education in the sense we define it. Thank you for this room. It was really refreshing. You challenged me, and I hope I’ve done reasonable justice to the challenge. It’s a topic, you mentioned it, where we could make x number of rooms and develop topics, but I think it’ll keep accompanying us again and again. I wish you all a nice day, and thank you again for this room.

Yes, great, thank you, thank you so much to all of you too, and especially to you, Jürgen, for all the explanations. And I thought it was great, because on one hand it’s not at all about being comprehensive, but I think what became clear again is what significance the whole thing has for us too. Yes, especially the discussions taking place here, that requires, in inverted commas, in some places, a basic know-how, so to speak, to even be able to assess and recognize opportunities and risks in this context, and get into a discussion about it too, against the backdrop of taking apart terminology again too, to look at what function this actually has, how did it historically develop on one hand, and on the other hand, where are we heading, and what opportunities and risks arise from that too. And thereby, in a way, to be able to speak on various levels too, but at the same time also tie in, look for yourself individually at what that would mean for me personally, or for me as a company, and so on, and whether these are developments we should welcome, in inverted commas, or look at with a certain skepticism too, and what options exist here too, or possibly not just being an advocate of something that’s just coming, or that gets sold to us as purely positive, in inverted commas, but at the same time also the consequences. And we keep having all this complexity, it has a long tail, all the way to these discussions that got opened up today too, along the way, whether there might be banks at some point or not, whether that gets dissolved. Important aspects that play a role here. And so it makes sense to look at this from various perspectives, and have a certain know-how in this context for yourself too. And one thing I find really clear in this exchange, you notice not just, wow, I learned something new here, but also how much education is “missing” at this point, because we simply don’t get enough of this, per se, in the classic system, in school forms and so on, and how important that basically is, or what relevance that has regarding ourselves. And so I really thought it was great to get into this exchange, without ultimately, so to speak, advocating for one direction or being against another, but rather opening up a lot of question marks in the first place, to start thinking, and to be able to look at one thing or another in the future against the backdrop of a different focus too. And I think that’s something this reflection space enables too. And with that we’re at the topic of education, and so it’s no surprise that we continue tomorrow with Future Skills. That was basically already planned and intended, because now all these connection points become clear too. And we want to look more closely at the term Future Skills, and talk about whether that’s a new trend now, or what exactly is hidden behind the term, and I’m looking forward to that too. So you’re all very, very warmly invited to join again tomorrow morning at 8am, when we talk about this term in this exchange, and see what’s behind it. At the same time I’d also like to say a heartfelt thank you again, not just to those who participated on stage today, but also in the chat. I followed along in parallel, and it was really great to see that questions got formulated here too, some of which got picked up by others and answered too. That’s why I haven’t picked those up again now, to not completely jump around with time. So thank you, thank you so much too, to those who could provide answers, and already did so in the chat. I think that’s great too. And we also got a question in the meantime, about where the recordings can actually be found, and I’d like to briefly address that too, to close. We have a website for the Deep Talk Club, and you’ll find it at deeptalkclub.com, all one word. And there, among other things, under the category authors’ breakfasts and expert talks, you’ll find, pretty far down, the links to the podcast too. And of course there are further categories beyond that too, like the Daily by now, and so on. But if you go to the Deep Talk Club first and look, we’re on all sorts of channels, starting with Apple Podcasts, through Spotify, Amazon Music, and so on, all the way to YouTube, where it’s posted too. So just pick whichever channel you prefer, and you’ll find all the other playlists there too, that exist beyond the authors’ breakfasts and expert talks. And you’ll have the option there too to listen back to one thing or another again, because we talked about this — on one hand it’s good, in inverted commas, because our brain is storing this topic right now. Through what we’re doing here, we’re forming new pathways, new networks, neural networks. And that’s really important, it’s nice that this is growing too. That’s really how you can imagine it. But if that doesn’t get nurtured and maintained, it regresses again too. And so it makes sense to not have the feeling, well, I’ve already heard that, but to also, in the sense of repetition, listen back into one episode or another again in between. Not just if you missed it, but also to do a repetition, to reinforce, in one place or another, the new neural networks that formed here through repetition too. And so I can recommend using these opportunities again and again — it’s like listening to an audiobook during sports, or while shopping, or whatever, wherever it fits well into your everyday life, to pick up on these opportunities too. Right, and with that I’d like to say a really heartfelt thank you. It was really a wonderful room, I think. I’m looking forward to tomorrow, and wish you a nice day, whatever you have planned today. Until tomorrow.