THE BIG READ: RULES OF ENGAGEMENT
at least in the digital world. Europe, on the other hand, still seems to trust that this strategy should not be necessary between friends. However, giving up our own pipelines through which financial resources flow is comparable to a situation in which our domestic water and electricity pipes are controlled by our neighbour. Would we really take the chance that they would not cut off our electricity in the event of a neighbourly dispute? Or would we prefer to have sovereignty over our pipelines?
Europe’s building blocks To ensure Europe’s sovereignty, three building blocks are key in the area of
payment infrastructure: l
The digital euro; l
A usable European and Europe-wide alternative to American credit cards and online payment options; and
l
The denomination of global flows of goods − i.e. trade and trade finance − in euros.
This will only be possible through concerted action by politicians, regulators, commercial banks and businesses. In this way, the digital euro can help Europe retain sovereignty and autonomy over the use of currency and data. To make this possible, the focus should not only be on the necessary rules and regulation, but also on the potential future benefits for end consumers and trading companies. The EC has set itself the goal of strengthening the international role of the euro and making it more resilient. It therefore calls for and promotes euro-denominated investments and trading contracts, commodity derivatives and reference indices.
A highly developed technical infrastructure is needed for another reason. The increased digitalisation of the economy and the emergence of new business models such as AaaS are generating enormous amounts of data. While the digital linking of products (the Internet of Things) is still in its infancy, one can already guess what insights the resulting data will offer. But one central question remains unanswered: who actually owns the data generated by the Internet of Things? And who can use it, and for what purposes? Europe has accepted that American big tech companies have a near monopoly on collecting and analysing consumer data. But should Europe also give up the data generated by AaaS business models without a fight? Some joke that while the US has the ‘Internet’, Europe has the ‘Things’. Yet this is actually a starting point
Visit us at
flow.db.com
that can be built upon, or – to stay with the card game analogy – a pretty good hand.
In this context, banks need to enable the execution of AaaS models through a variety of innovations. What is required, for example, are data trusteeships, including the ability to technically record exactly whether and for how long a corresponding product has been used, and by whom. The implementation of payments with very small amounts is also required. Then there is the need for new forms of financing for AaaS providers.
Take a large manufacturer of 3D printers who wants to offer these machines in future, not only for sale but also on a usage basis. Who should then own the machine, which can easily cost upwards of half a million euros? The manufacturer, the end customer or possibly a third party? How should it be financed? And finally, how should the use be recorded and billed?
Banks must find answers to these issues if European companies want to tap into the opportunities of AaaS for themselves.
Similarly, banks are something of a natural partner for companies in ESG management. After all, the more able companies are to convince the capital markets that their supply chains are sustainable, that they produce in an ESG-compliant manner, and that they prepare the corresponding data and information transparently, the easier it is for them to access equity and debt capital. Advice on green bonds and bank loans is an obvious starting point for banks here. In addition, however, an even broader range of ESG-compliant financial services needs to be created by banks to support companies in their individual
The increased digitalisation of the economy and the emergence of new business models such as AaaS are generating enormous
amounts of data
ESG transformations. Examples of this are financial contracts with ESG-dependent conditions, or options for the verification of sustainability-relevant supply chain data. All this requires an intensive dialogue between banks and companies. This will deepen not only the exchange of data, but also the advisory dialogue.
The structural change and need for adaptation triggered by these global trends is considerable, no question. However, it also offers great opportunities for European companies and their banking partners. The basic prerequisite for this is, of course, that Europeans − to return to the poker game analogy − also play their hand consistently. This should start with us finally going all-in on the subject of the single market; more people live in the 27 EU member states than in the US. But in many areas there is still no real common market. As a result, companies are not achieving the economies of scale available.
Position of strength The completion of the European single market should therefore be driven forward quickly with harmonisation of patent laws and data standards, and the establishment of a capital market and banking union, to name but a few structural milestones. This would not only boost growth and the integration of economies (which are still largely national) into a genuine European domestic market, but also help the EU to remain attractive to its member states and help it defend its values internationally.
Last but not least, a strong position in the European home market is also the basis for tapping growth potential in other parts of the world. This is especially true when serious changes occur, such as those in the Middle East. The US had already begun to withdraw from this region under President Barack Obama, not least because it is steadily less dependent on oil imports. It can be assumed that the new administration under President Joe Biden will continue this course. Conversely, China is expanding its influence in the Middle East. In the meantime, the government in Beijing has concluded several economic agreements with states in the region and will probably further intensify relations, for example with Saudi Arabia.
China is acting in the Middle East like the patient poker player with deep pockets. The Middle Kingdom is benefiting from the fact that this region is on its way from being
27
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94
