The topics of blockchain and digital assets, including crypto, are now an integral part of every industry conference in the financial sector. At last week's Börsen-Zeitung Finanzplatztag, a high-calibre panel addressed the question of how disruptive digital money and digital assets are.

Christian Rhino, who recently moved to Deutsche Bank as Chief Information Officer of the Private Bank corporate division, comments that „I believe that it will bring huge progress for us in the industry in terms of increasing efficiency. It is important that we also have the relevant regulatory expertise.“ Rhino also cited the provision of liquidity for digital assets as one of the key advantages of banks.

Stephan Paxmann, Chief Innovation Officer at LBBW, noted that the Landesbank is strongly focused on corporate banking, and acts in a customer-centric manner. „This means that we first look at what is happening with customers and where they have the greatest need in the area of digital assets", he said. In some cases, clients are not even aware of where there is a need. The demand for blockchain-based solutions is likely to increase following on from innovation.

Former Bundesbank Executive Board member Joachim Wuermeling, who took part in the panel as a representative of the European School of Management and Technology (ESMT Berlin) and senior advisor at law firm A&O Shearman, stressed that „you only know how disruptive something is in hindsight“.

He cited the founding of the music exchange website Napster at the turn of the millennium as an example. Napster was intended to make it easier to distribute MP3 music files over the Internet. „In hindsight, you could see that music had migrated to the internet,“ said Wuermeling. Now we can also just pack valuable items into „files“, in the form of securities and money, and send them around the net.

Wuermeling sees the development of digital assets as „a completely new option for making the development of capital markets more European, competitive and efficient by transferring them online“. This would create new advantages for the Frankfurt financial centre. „The legal foundations have been created in good time – the starting conditions for a disruptive development are now in place,“ was the former central banker's verdict.

Essentially, it is about exchange transactions in a fully digitalised form. On the services side, this could be anything in future: Gold bars, seats on an aeroplane, even pig halves, joked Wuermeling.

Rhino warned that the ECB must actively involve banks in the development of digital money so that they can bridge the gap to the customer. Acceptance must also prevail on the merchant side. „Smart contracts, for example, only work in a network, even across borders. But we're not there yet,“ Rhino admitted. However, the technology and platform are available at Deutsche Bank. The bank has also applied for the MiCA licence.

According to Wuermeling, central banks are currently facing a crucial question: „Am I also responsible for banks“ business processes or just for payment transactions?’

Paxmann emphasised that LBBW wants to retain sovereignty over the business process. „We are operating on the public and private blockchain,“ said Paxmann. „At the moment, it's important for us as an institution to take a two-pronged approach.“ There are very good grounds for both approaches.

Rhino added that "we have a huge opportunity to work shoulder to shoulder with the regulators to drive things forward. There are over 4,000 pages of proposals on how we can tokenise.“ As is so often the case, regulators, banks and other stakeholders need to think together.

And what does this mean for the future of the physical financial centre? „There will be a dematerialisation of assets,“ expects Wuermeling. The financial centre as a place will be partially replaced by digital networks. It is important to work on creating the conditions for a digital financial centre.