Facebook’s plan of launching a private digital payment token called Libra was announced to help the people and not to force the governments into entering the public electronic currency themselves.
With the involvement of government bodies in the investigation and approval for the launch, Libra has started what they didn’t expect in the very first place. Central banks and government officials were researching on the project, but the sudden launching of new cryptocurrencies and platforms, it has caused a sudden urgency in the political areas to work on their digital currencies.
Bruno Le Maire, the French finance minister, have asked the World Bank and IMF to open a global discussion at the next annual meeting for the need for government-issued electronic currencies, or e-cash. Le Maire is one of the most outspoken critics against Libra, and he is against the launching of the project in the European Union as it might cause a threat to the existing monetary policies.
The announcement of Libra shocked the policymakers and regulators and immediately a working group was set on Libra by G7 economies. This was chaired by Benoît Cœuré who is the member of European Central Bank’s executive board.
A long discussion took place between the ministers on the risks that are involved with Libra, and many ministers suggested to pull the plug on the issue. Cœuré, in a speech, mentioned how these initiatives by private companies have some major security and privacy concerns, especially with Facebook’s Libra. He explained how the financial stability of the central banks would be affected, and this should be a wake-up call for them.
Concerned Central Banks
Central Banks have been investigating the process of how the central bank digital currencies will work for years before politicians entered in this direction. For the eurozone, where the area is reliant on banks for the channel of finance between the savers and borrowers, the important concern is how the central bank-issued digital currency will work and how it will affect the banking sector.
A recent survey by the Bank for International Settlements showed that around 70% of the 63 central banks have polled for the fact that they are working on the issues and developments that are involved in launching and working of digital currency. Some banks have moved to pilot trials while some are moving in the direction of hands-on proof-of-concept investigations.