The European Central Bank is reportedly considering to launch its public digital currency. This move may be regarded as a direct response to the announcement of Facebook’s Libra.
As reported by Reuters, the draft states that the European Union should consider launching a public digital currency by working closely with the European Central Bank. Purportedly, an official from the ECB has said that such a project would allow customers to use electronic cash, which is directly deposited at the bank and thus eliminating the need for bank accounts or financial intermediaries.
An EU-based digital currency has been previously endorsed by ECB Board member – Benoit Coeure, who said that the bank should consider a possible entry in this market. Back in September, he pointed out that “global stablecoin initiatives can make international payments cheaper and faster and support financial inclusion.” In his words, they could also raise serious challenges in terms of safety, operational robustness, customer protection, and “risk to financial stability and monetary sovereignty.”
After announcing Libra to the world in April, Facebook brought serious media attention to itself and the entire cryptocurrency market. It started with officials from Germany and France agreeing to block Libra in their respective countries and continued with U.S. Congressional Hearings, calling it potential threat to the U.S. dollar.
The current version of the draft mentioned above is also focusing on better regulatory campaigns against cryptocurrencies. Reportedly, legislative requirements until this point haven’t been exceptionally high because of the low impact that stablecoins had. However, Facebook’s involvement and its broad reach over billions of users, has purportedly raised severe concerns among regulators.
As per Markus Ferber, member of the EU Parliament since 1994, “the [EU] Commission has been way too complacent on the issue so far. With the threat of Libra on the horizon, it is time for action now.”
Reportedly, the draft was created by the Finnish EU presidency, and it also reads:
“The ECB and other EU central banks could usefully explore the opportunities as well as challenges of issuing central bank digital currencies, including by considering concrete steps to this effect.”