The landscape of currency is undergoing a significant transformation. While cash remains a fundamental means of payment, the rise of digital transactions and Central Bank Digital Currencies (CBDCs) is reshaping the future of money.
One company at the forefront of this evolution is Giesecke+Devrient (G+D), a global leader in security technology and currency management. Dr Wolfram Seidemann, CEO of the group’s Currency Technology business unit, shared with Currency News™ his insights into the company’s journey in currency technology, the future of cash, the role of CBDCs in a rapidly digitising world and how G+D is addressing the markets for two different forms of public payments that, in the minds of some, are competitive.
Q: To start, can you give some personal background on your career to date?
A: I have a degree in Electrical Engineering from the Technical University of Munich and joined G+D in 1999, starting in the smart card division within R&D. From there, my career took me across Asia, including Singapore and Taiwan, where I was responsible for the region. I moved back to Europe and was responsible for the sales of banknote processing systems. After that I took over as the head of Louisenthal, focusing on security features and paper, before taking on the position of CEO of Currency Technology in 2017.
Q: Most of the sector is already familiar with G+D, but could you briefly summarise the activities of Currency Technology?
A: G+D is a SecurityTech company with three business segments – Digital Security, which covers mobile connectivity and IOT, identity and digital infrastructure; Financial Platforms, providing payment technologies and trusted software for private financial players; and then Currency Technology.
Here we are focused on a holistic offering for public currencies. Our division for banknote solutions involves the substrate, design and production of banknotes.
Second is currency management solutions, which relates to the cash cycle and includes intelligent automation, banknote processing and services. And third is our own unit for Central Bank Digital Currencies (CBDC), created in 2018.
Q: The commercial paper and print sector have consolidated, and reduced, over the past few years. Cash use is falling (in some parts of the world). Did you see this coming, and is this why you have branched out into CBDC?
A: Despite popular narratives suggesting the decline of cash, we actually see cash in circulation increasing on a global scale.
In some cases growth has even been in double digits.
However, in the usage of cash, there are different regional developments. We did an interesting analysis recently where we looked at the percentage of cash use in the country, and the change of cash use over time. From this, we identified three scenarios.
There are countries with high volume of cash usage, where central banks have even told us they are struggling to manage the volumes. There are countries in which cash transactions at the point-of-sale are decreasing, at the same time the circulating volumes remain high. That’s the classic cash paradox, where cash serves as store of value. And we see countries with declining usage of cash as people switch to alternative payments.
Despite these different development paths, cash keeps its vital role as reliable and most inclusive payment method in today´s world with an evolving payment landscape.
During times of uncertainty, demand for cash often spikes, reinforcing its role as a financial stabiliser.
That´s why G+D continues to invest in its strong currency technology business and fosters innovation to ensure that cash remains relevant and secure.
At the same time, cash as the only form of public money does not function in the digital sphere. We anticipated this global payment trend early and extended our activities into the offering of a digital form of public money. Therefore we have our foot in both fields, co-existing side by side and complementing each other.
Q: Can you describe your journey to CBDC and where you are today?
A: We actually started exploring CBDCs in 2017 in an internal Think Tank. We assembled a team of experts – including cryptologists, digital payment specialists, and even historians – to analyse the evolution of money. At first, we questioned whether a new form of money was even necessary. Digital payments by private entities already existed. But we wanted to understand if a state-backed digital currency could offer advantages or any use case that couldn’t be solved by existing digital payment solutions.
The turning point for CBDCs came with Marc Zuckerberg´s project Libra in 2019 with the intention to create a dedicated currency for the Facebook community, and with China’s digital yuan. Libra in particular was a wake-up call. It showed that private entities were moving quickly into digital currency, which raised concerns about sovereignty and monetary control. Central banks needed to act.
And so did we.
Unlike cryptocurrencies or private digital payment platforms, CBDCs are issued and regulated by central banks, ensuring trust and stability. In consultation with central banks and looking at the available technologies out there, we developed our own technology stack Filia, today a production-ready CBDC solution designed to meet the demands of central banks worldwide.
The solution is token-based and provides cash-like features like a high level of privacy, universal usage, accessibility and trust. The protection of data is of utmost importance to a CBDC, unlike commercial digital payment solutions that collect user data as part of their business model.
And another still is financial inclusion.
CBDCs can provide unbanked populations with access to digital financial services without requiring traditional bank accounts.
One major USP of our solution is its ability to conclude offline transactions.
Issues with digital transactions can be driven by technical disruptions, power outages, cyber-attacks, or even natural disasters such as storms or floods.
G+Ds Filia solution enables peer-to-peer transactions also in situations without an internet connection.
Q: Where have you been successful to date?
A: We’ve now worked with several central banks to pilot CBDC solutions.
For example, we have collaborated with Ghana on both online and offline CBDC implementations. Other partners include the central banks of Thailand, Hong Kong, Brazil, and Eswatini.
And we have won several awards, for example as winner of Global CBDC Challenge Monetary Authority of Singapore and of Best Technology Hong Kong Monetary Authority.
Recently we were cited by Juniper Research as the leader in CBDC solutions, which I think is a great reflection of our journey and what has gone into the development of our solution.
Q: In your digital payment journey, are you just focusing on CBDC, or other forms of digital payments as well?
A: Yes. In its portfolio the G+D Group stands for the freedom of choice in payments. As mentioned earlier we address card and digital payment solutions for commercial banks and e-commerce solutions for merchants in our business segment Financial Platforms. But within Currency Technology, our focus is on CBDC and, in particular retail CBDC.
We believe that central banks need to provide a basic public infrastructure for payment. They do that already with cash, and they also do that in the digital space with account-to-account payment solutions, offering wholesale settlement systems to commercial market participants. But there aren’t any digital, state-backed payment instruments for citizens. Currently only arrangements with private third parties are available to them.
We all know the value that the public option brings to us because cash is available to everybody, independently from social status or certain prerequisites. Cash payments don´t collect data. Cash protects your privacy. And cash is fully inclusive.
Our goal, and focus on retail CBDC, is to transfer these values into the digital space.
The company’s expertise in both banknotes and digital security solutions makes it a trusted advisor for central banks navigating this transition. We don’t just provide technology; we help central banks design their entire digital currency ecosystems.
Q: Which brings us neatly to the coexistence, or lack of it, between physical and digital cash. One common concern is that CBDCs will replace cash. How do you answer this concern?
A: They will co-exist. Cash has unique advantages – a banknote is a banknote is a banknote, and the beauty of it is that it works independently and does not require any interoperability. It is also universally applicable and is fully private.
However, CBDCs can complement cash by offering a standardised, interoperable digital public payment option if one is needed. There are many ways that this interoperability could work. For example, ATMs that allow users to exchange cash for CBDCs and vice versa, or digital wallets that accept both cash and CBDCs, or payments that provide change in digital form.
Contrary to the existing fragmented market for digital payments , a CBDC will be completely interchangeable. That’s what makes it so attractive because it can provide the strongest network effect, and in some countries, there is even a debate to make it legal tender. Which will further accelerate acceptance that will, in turn, drive standardisation.
All of this will happen in parallel to the physical version of a currency because people will always want, and need, to hold the value of their money in their hands, and that is cash.
Q: You mentioned earlier that a retail CBDC will enhance financial inclusion. How?
A: CBDCs have the potential to enhance financial inclusion significantly. While cash is the most inclusive payment method, existing digital payment solutions require a bank account, or connection devices, which come with a certain cost, and so are a barrier to including all groups of society.
CBDCs, by contrast, can bring digital payments to everyone, also to unbanked populations. For example, in a pilot with Ghana, unbanked individuals could use CBDCs, allowing them to participate in e-commerce and digital services.
Over time, digital wallets can serve as an entry ramp to the broader financial system, enabling access to credit and other services.
Q: Moving now to cash, which is still important to G+D. Less cash and sustainability all point towards streamlining the cash cycle, and less profit from cash is changing the traditional business model associated with cash cycle operations.
What opportunities and threats will this bring for G+D in particular, and the industry more broadly?
A: As mentioned before, we recently identified three different scenarios in the usage of cash.
First are countries with high volumes of cash usage, where the challenge is managing these volumes, and solutions include clean note policies, along with efficient cash cycle management.
Second are countries in a classic cash paradox. Here, efficiency is important, to make cash attractive and not an expensive solutions for businesses, and to ensure that an infrastructure is still in place to meet requirements for access, availability and acceptance of cash.
And then there are those countries where cash is declining and where governments are having to step in to ensure continued access to cash.
Each of these countries or scenarios require different solutions. And yes – there are opportunities for all three, but also threats because if we fall below a certain threshold of cash at the point of sale, it becomes more difficult to come up with intelligent solutions to keep cash attractive and in circulation.
So, for example, take a country like the Netherlands where cashback doesn’t work because there’s not enough cash being used to enable it to be paid out from the tills. So obviously that particular tool was introduced too late in the cash cycle.
And we have to think too about solutions that allows people to access cash and to allow businesses to accept it at a competitive cost level. Strategically, we look into these changing developments of cash usage, adapt our offering accordingly to the regional needs of central banks and drive innovative solutions.
Q: Let’s talk about the technological solutions impacting cash, and G+D.
A: Let me have a look at Artificial Intelligence (AI) as we draw our attention on its implications and opportunities in the cash cycle. G+D is actively leveraging AI innovations, which can be used for counterfeit detection, cash cycle optimisation, and even generating certain banknote designs.
We have been using machine learning for some time already, so that our sensors on our processing systems learn from the data and adapt their capabilities to identify unfit or counterfeit notes.
But a more recent development is large language models for generative AI solutions, that can assist in the design of banknotes, for example. We originally thought that technology would have a major impact on blue collar jobs, but it is actually the creative jobs it is challenging now.
Q: Great, so that’s us out of jobs then!
A: No, that´s not my saying. Rather: What you are already good at, you will be even better at with AI. What you aren’t so good at, or which you don’t like doing, can be helped by AI. That’s the way how we look at that. And what we’re doing.
As an aside, we had an internal trial to create the future Euro banknote designs with the support of AI, asking us ‘what would be the most attractive theme for the next Euro series?’ Selecting these to cover every country is difficult – famous people, ancient pillar of culture, and so on. We played with AI in the ideation and merged pictures of prominent composers of different European nations. The results weren’t that attractive – a Beethoven style hairstyle with the face of a young Chopin doesn’t really work.
But the point is that AI can be used to try out all sorts of creative ideas and can be supportive in the creation process.
As for other areas, we are using the technology that has been developed in other parts of the G+D Group. IoT, the Internet of Things, is a good example.
You can really improve cash logistics with intelligent solutions that track and trace containers.
Additionally, the rise of cash-tech startups is an area of interest. Virtual ATMs and gig economy-driven cash access solutions can help keep cash relevant in the digital age.
If you are really interested in learning about our innovation roadmap and seeing the breadth of our technology development, in both physical and digital currency, our in-house customer event Currency Symposium in July is the place to be for the best insights.
Q: To conclude, as this is Currency News and our main interest in physical currency, where will cash be in ten years’ time?
A: That’s a very good question and one we think about every day.
In my view, cash will remain a crucial part of the financial system. We might see a decline in cash usage at the point of sale in some regions, but overall, cash will persist. As a public form of money it serves a value for society none of the other existing payments methods has. It serves as a financial safety net and as most inclusive, payment method protecting privacy of the individual. Cash is freedom in practice.
There are indications that central banks are playing a more active role in ensuring the long-term viability of cash. And we are likely to see more and more governments regulate for cash, if for no other reason that they secure its functioning in times of increasing uncertainty and crisis.
Finally, psychologists will tell you that a system as complex as payments is an abstract that can only be fully understood by human brains after the age of 12. Indeed, in some case, it may never be understood. The index worldwide regarding financial education is low and in my view cash plays an important role in educating young people in particular on the concept of money. For very young people, you can only understand what you can touch and feel, ie. coins and banknotes.
So cash also plays an instrumental role for our next generation to understand what money is. And we need that.
