The governor of Riksbank, Sweden’s central bank, said today that Facebook’s Libra has turned out to be a very important event. The bank has already been exploring the issuance of digital currencies, mainly because the usage of cash in Sweden is decreasing dramatically.
Libra’s Launch Was “Catalytic”
Despite many of the key backers of Facebook’s Libra, including PayPal, Visa, and Mastercard, dropping out of the project, good news seems to have come on a different front. Stefan Ingves, Riksbanks’ governor, appeared on CNBC’s Squawk Box Europe today, saying:
“It has been an incredibly important catalytic event to sort of shake the tree when Libra showed up out of the blue, and that forced us to think hard about what we do.”
Ingves, whose central bank will pilot the “e-krona” state-backed cryptocurrency later this year, stated that innovation is needed in order to adequately serve Swedish citizens. He noted that Riksbank would be “out of business” if it started issuing “20-kilo copper coins” the way it did in 1668.
“In this day and age, we have to twist things in our heads and do things based on the assumption that nothing is on paper, and then when we talk about money everything is going to be digital in one form or the other.”
Challenges Ahead for Libra
While Ingves praised Libra for entering the market, the central bank chief warned Facebook of the challenges the tech giant will face on its path to launch Libra.
“The old issues — private sector money or public sector money — they are basically identical, and if history gives us any guidance at all, then almost all private sector initiatives have collapsed sooner or later.”
Having recently lost some of its key backers, Libra has been facing harsh regulatory scrutiny for a while, with EU finance ministers pushing for a response on Libra from G20 nations.
While France and Germany are openly seeking to block the project, Facebook CEO Mark Zuckerberg will have to answer questions from US lawmakers on Libra next week.
In response to the aforementioned challenges, Libra today announced its 21 founding members – including Uber, Lyft, and Spotify – who signed the Libra Association charter during their first meeting in Geneva, Switzerland.
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