Today there has been lots of talk about cryptocurrencies including Libra from the central banks.
Fed’s Powell said that the single government currency (USD) has served the country well, when being questioned by the sentate today.
He then went on to say:
Facebook’s Libra ‘really lit a fire’ on the question of a digital dollar.
We’re working hard on it, we have a lot of projects going on, lot of efforts going on on that right now.
Preserving centrality of a trusted currency is important.
Its unclear if a digital currency helps with that.
This seems to be about control. With crypto’s it is very hard to control the supply. Unless you keep money in escrow like Ripple. Before all the questions surrounding a central bank digital currency (CBDC) were about anti money laundering and terrorist financing.
The ECB also had their say today as New ECB President Lagarde said:
The ECB is assessing the potential and implications of technological developments for payment services and financial stability, and it is also making an active contribution to such innovations.
To this end, we set up a Eurosystem task force in January to investigate the opportunities and challenges associated with different potential designs for a central bank digital currency and to test how they would work in practice.
In particular, we want to assess whether a central bank digital currency could serve a clear purpose for the public and support the ECB’s objectives. Together with five other central banks and the Bank for International Settlements, we will share experiences in this area and assess the potential cross-border use of such digital currencies.
So the ECB are further ahead with their plans. This is not a surprise as they have mentioned this a few times over. Now we need to see a product and some more details. France and German have been very critical of Libra and its clear to see why if they are making a competitive product. Only time will tell if this test will be successful but the anonymity of current crypto’s will still be a reason for them to stick around. I think current crypto traders are not happy with central banks controlling the markets.
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