According to the Financial Times, Facebook’s Libra cryptocurrency is readying to launch as early as January 2021. As news leaks out after Financial Times citing three unidentified people involved in the project, a senior European Central Bank official, Fabio Panetta, warns: "What is at stake is nothing short of the future of money. As private money goes digital, sovereign money also needs to be reinvented. This requires central bank money to remain available under all circumstances - in the form of cash, of course, but also potentially as a digital euro."
The Geneva-based Libra Affiliation that can subject and govern Libra plans to launch a single digital coin backed by the greenback, a major scaling again from its not too long ago revised plans to to subject a sequence of stablecoins backed by particular person conventional currencies, in addition to a token primarily based on the currency-pegged stablecoins.
The information about a possible 2021 launch for Facebook's digital currency Libra has alarmed central banks, that are at the moment at a minimal of two years out from creating their very own digital alternatives.
ECB board member Fabio Panetta, talking at the moment at a Bundesbank-convened way forward for funds convention, argues that the approaching revolution in payments “requires us to stand ready to reinvent sovereign money". He warns: "Stablecoin users are likely to bear higher credit, market and liquidity risks, and the stablecoins themselves are vulnerable to runs, with potentially systemic implications."
He says the dangers may very well be mitigated if the stablecoin issuer have been in a position to make investments its reserve belongings within the type of risk-free deposits on the central financial institution, as this might eradicate the funding dangers that finally fall on the shoulders of stablecoin holders.
Panetta argues that "This would not be acceptable, as it would be tantamount to outsourcing the provision of central bank money. It could endanger monetary sovereignty if, as a result, private money - the stablecoin - were to largely displace sovereign money as a means of payment. Money would then be reduced to a 'club good' offered in return for the payment of a fee or membership of a platform."
The ECB is mustering help for the creation of a a digital euro, with a number of experiments underway throughout EU markets and world wide. In Europe, the ECB and the nationwide central banks have began preliminary experimentation via 4 work streams. Panetta outlines: “First, we will test the compatibility between a digital euro and existing central bank settlement services (such as TIPS). Second, we will explore the interconnection between decentralised technologies, such as distributed ledgers, and centralised systems. Third, we will investigate the use of payment-dedicated blockchains with electronic identity. And fourth, we will assess the functionalities of hardware devices that could enable offline transactions, guaranteeing privacy."
German finance minister Olaf Scholz urged the central banking community to pick up the pace: "On the digital euro, I think we should work very hard. It is nothing where we should wait and see. We should be able to decide at any time that now we should do something with a digital euro."
__________________________________________________
Sources:
https://www.newsnow.com/us/Business/Cryptocurrencies/Libra
https://www.finextra.com/newsarticle/37037/ecb-warns-the-future-of-money-is-at-stake-as-facebook-preps-january-crypto-launch
http://eubankers.net/article/86368/ecb-warns-the-future-of-money-is-at-stake-as-facebook-preps-january-crypto-launch
https://thefutureraise.com/2020/11/28/ecb-warns-the-future-of-money-is-at-stake-as-facebook-preps-january-crypto-launch/
https://americanonlinenews.net/2020/11/27/ecb-warns-the-future-of-money-is-at-stake-as-facebook-preps-january-crypto-launch-finextra/
Président de l'association
