According to an Oct. 15 report from The Canadian Press, Timothy Lane, deputy governor of the Bank of Canada, or BoC, said central banks should have their own digital currency ready should regulators block Facebook’s Libra token. He also noted that such an asset is important as a possible solution for the economic realities of COVID-19.
Lane spoke at an online panel discussion hosted by the Central Bank Payments Conference, stating that the Bank of Canada has been developing a central bank digital currency, or CBDC, at “a good pace.” He said the bank would need to hold consultations regarding what Canadians expected from a digital currency, but added Facebook’s efforts introducing Libra could help improve cross-border payments. He additionally noted that it could help unbanked and underbanked people become part of the global economy.
“That’s the nub of the question: whether the answer is Libra or whether it’s something that central banks do,” said Lane. “If we’re saying, well, it should be [a CBDC and] not Libra, then we have to have something ready so that if a decision were taken that central bank digital currency is the way to go, we would actually be ready to launch it.”
The deputy governor’s comments are a change from those in pre-pandemic February, when he declared that there was “not a compelling case” for the bank to create a CBDC. Canada’s central bank also recently released a report calling CBDCs “risky,” given the competition among crypto exchanges and banks, and how the digital currency is used for transactions.
Global regulators including the G20’s financial watchdog, the Financial Stability Board, or FSB, recently published regulatory recommendations opposing global stablecoins like Libra. The group stated such stablecoins could become “systemically important” across jurisdictions, undermining the capacity for governments to dictate monetary and investment policy within their borders.
Cointelegraph reported on Oct. 12 that seven members of the G20 representing the world’s largest economies said they would initially oppose the launch of global stablecoin projects — which would include Libra — pending appropriate regulatory oversight. The group of seven has raised concerns over how to ensure digital assets comply with anti-money laundering laws, consumer protection rules, and other regulatory matters.
“The progression here is not to disrupt the system or compete with it, but really to augment consumers payment optionality and to complete the system,” said the Libra Association’s policy director Julien Le Goc in the same online panel as Lane.
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