It seems Facebook’s woes are starting to mount as the European Central Bank (ECB) revives plans to create its own digital currency in direct competition to Libra and bitcoin.
Yet another Libra challenger steps up to the plate. This time, it isn’t China’s incipient central bank digital currency (CBDC) but instead a newly proposed CBDC from the ECB. According to Reuters, speaking at a news conference after a meeting of EU finance ministers in Helsinki, ECB board member Benoit Coeure noted that Libra was a “wake-up call.”
“We also need to step up our thinking on a central bank digital currency.”
This “wake up call” has allegedly resuscitated the ECB’s long-term efforts to create a digital currency. An official at the ECB gave an idea of some characteristics of the proposed project. Allegedly, the CBDC will be a digital form of cash that could be deposited directly at the ECB, negating the need for bank accounts or intermediaries.
Unfortunately, things turned even sourer for Libra. Bruno Le Maire and Olaf Scholz, respective finance ministers for France and Germany, threw their weight behind the ECB’s plans, encouraging the acceleration of work on “issues around possible public digital currency solutions.”
In a joint statement, the pair also threatened to block Libra due to its potential imposition on the financial industry.
“France and Germany consider that the libra project, as set out in Facebook’s blueprint, fails to convince that those risks will be properly addressed.”
Libra, it seems, is not short on rivals. This week, Danish politician Margrethe Vestager accepted the position as the European’s Commission’s executive vice president for digital. Vestager is already a formidable rival to Libra thanks to her stint as the EU’s competition commissioner, a role which she continues to preside over.
Libra’s regulatory sorrows are still posing a significant hurdle for the cryptocurrency, with both the U.S. and the EU’s antitrust regulators breathing heavily down Facebook’s neck. Speaking on the nascent project back in May, Vestager noted:
“From both a competition and a financial stability perspective, Libra will have our interest,”
And it seems Vestager stuck to her guns, with regulatory due diligence now acting as the veritable stick-in-the-mud for Libra’s progress.
While the whole world, including the bitcoin community, seems to loathe Facebook’s attempt at a digital currency, Libra does seem to have one fan. During a speech at the U.S. Federal Reserve annual symposium, Mark Carney, the governor of the Bank of England, opined that a Libra-like digital currency could replace the U.S. dollar as the world’s reserve currency.
“…The relatively high costs of domestic and cross border electronic payments are encouraging innovation, with new entrants applying new technologies to offer lower cost, more convenient retail payment services. The most high profile of these has been Libra – a new payments infrastructure based on an international stablecoin fully backed by reserve assets in a basket of currencies.”
Essentially the crux of Carney’s goal is to replace the dollar as the world’s de facto reserve currency. Indeed, in closing, Carney noted that a “Synthetic Hegemonic Currency” would best be offered via a network of CBDCs. Therefore, though Carney is supportive of Libra, it’s likely he would ultimately favor the ECB’s project over that of Facebook’s.
This article was edited by Gerelyn Terzo.