Even though Libra has mostly been shunned and shut down by regulators, it has opened the eyes of many central banks who seem to understand that they have the ability, and the power, to launch their own digital currencies.
Central Bank Digital Currencies have shot to prominence, especially after the World Economic Forum at Davos. A number of major central banks have now indicated that they are willing to explore the space of digital currencies and look into the possibility of launching them.
Of course, famously, China has come a long way down the road to launching its own version, but the likes of Japan, England, and the EU central banks are all progressing quickly. Recently, The Bank of England‘s Chief Cashier and Director Sara John has added that it is crucial for central banks to research digital currencies before private companies dominate the space.
Setting the foundation
One of the major criticisms around Libra is the idea that a private entity, such as Facebook, would be able to simply launch a new currency. This would seriously undermine Central Banks and their power over the monetary systems.
“We need to think as an institution about how to position ourselves to make sure society still has a broad range of payments that it can use with confidence. It is absolutely right that central banks think about whether a public sector or private sector would be best to provide a digital currency going forward,” explained John.
Of course, this has many far-reaching implications, such as ensuring the regulatory framework is robust enough to support such a move. With this, John has said that it is time for central banks to think about digital currency as an option. This has seen the Financial Stability Board asked authorities to “quicken the pace” of developing regulations for the emerging asset class.
A race between West, China and Facebook
There seems to be a bit of a three-horse race developing as nations in the West try and catch up to the work that has been done in regards to China’s digital currency, as well as the private enterprises that are also pushing the envelope of digital currencies.
None of these major entities have been the first to release their offerings yet, but when one does eventually hit the market, it will be interesting to see if its impact is strong enough to dominate this new and emerging space.