Central banks must have digital currency alternative
A senior official at the Bank of Canada says central banks should have their own digital currency ready as an alternative if they decide to say no to one being developed by Facebook.
The social media giant has spent the last 16 months or so developing a digital currency it calls Libra.
Facebook’s foray into the digital currency market could help marginalized populations become part of the global economy and improve cross-border payments, Bank of Canada deputy governor Timothy Lane said Thursday.
But if regulators decide to block Libra’s use in a given country over regulatory or oversight concerns, Lane said a central bank should have its own digital currency ready for people to use.
He said the issue policy-makers are dealing with is how to regulate something that would be available to every one of Facebook’s users, and overseen by an association of companies headquartered in Switzerland.
“That’s the nub of the question: whether the answer is Libra or whether it’s something that central banks do,” he said.
“If we’re saying, well, it should be (central bank digital currency) 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 Bank of Canada has been developing its own digital currency at what Lane described as “a good pace,” one of a number of central banks doing the same kind of development should the need arise to issue one.
The Bank of Canada doesn’t have the legislative authority from Parliament to offer a digital currency, only to design, issue and distribute the bills stuffed inside wallets and handed over a counter.