EU considers launching its own cryptocurrency in response to Libra ‘threat’

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EU considers launching its own cryptocurrency In response to Libra 'threat'

In a move to counter the perceived threat of Facebook’s Libra cryptocurrency, a new draft document issued by the European Union (EU) suggests that the European Central Bank (ECB) should issue its own digital currency.

The draft, prepared by the Finnish EU presidency, suggested that “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,”

Additionally, the draft encouraged the EU to “develop a common approach to cryptocurrencies,” even going so far as to propose the possible banning of projects that are deemed too high-risk.

Markus Ferber, a German politician and Vice-Chair of the European Parliament’s Committee on Economic and Monetary Affairs, discussed the need for taking some action against Libra’s threat.

“At the very least, we need a robust regulatory framework to deal with virtual currencies.”

“The (executive 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,” he said.

Libra not welcome in Europe

Libra not welcome in Europe

In September 2019, ECB Executive Board Member Benoit Coeure said that there were “strong concerns” with Libra and that they had to “look very carefully at these projects, the bar for regulatory approval has been set very high.”

At the same time, French central bank governor Francois Villeroy de Galhau said that Libra raised concerns about money laundering and data protection.

French Finance Minister Bruno Le Maire shared their concerns, saying that he was convinced that the development of Libra within the EU should be rejected.

German Finance Minister Olaf Scholz also expressed his opposition to Libra, stating, “I favor not allowing the establishment of such a global currency because that is the responsibility of democratic states.”

Italy’s Finance Minister Roberto Gualtieri likewise agreed, noting that there was a “strong consensus” among European countries to block Libra and other private cryptocurrencies.

Central banks around the world to issue cryptocurrencies

Central banks around the world to issue cryptocurrencies

The ECB isn’t the only central bank with plans to issue a digital currency.

Following the release of Libra’s whitepaper in June, China stepped up the development of its own two-tiered digital currency.

Although no firm release date has yet been announced, several local news outlets have speculated that the cryptocurrency – which will be issued and controlled by the People’s Bank of China (PBOC) – could launch as soon as early 2020.

North Korea is also reportedly in the early stages of developing its own central bank-issued cryptocurrency.

Little is known about the planned digital currency other than it will function “more like Bitcoin or other cryptocurrencies.”

Turkey is also making its own foray into cryptocurrency.

According to a recent document released by the country’s only official journal, Resmi Gazete, Turkey is developing a digital lira, which will be issued by the Central Bank of the Republic of Turkey (CBRT) and is expected to be finalized by the end of 2020.

Even the United States appears to be inching its way into the cryptocurrency space.

A recent job posting by the U.S. Federal Reserve for a retail payments manager included among the position’s responsibilities the researching of the application of digital currencies in retail payments as well as “facilitating and contributing to innovations research including digital currencies, stable coins, distributed ledger technologies, and broadly financial/digital innovation in retail payments.”

The job posting, which has since been taken down, comes in the wake of a letter sent to Federal Reserve Chairman Jerome Powell from Rep. French Hill (R-Ark.) and Rep. Bill Foster (D-Ill.).

In the letter, the two congressmen urge the Federal Reserve to consider the creation of a “national currency.”

“We are concerned that the primacy of the U.S. Dollar could be in long-term jeopardy from wide adoption of digital fiat currencies,” the lawmakers wrote.

“Internationally, the Bank for International Settlements conducted a study that found that over 40 countries around the world have currently developed or are looking into developing a digital currency.”