The game of coins is on. And that’s not referring to another token offering bubble, but instead to increasing sovereign efforts aimed at the development of state-backed digital currencies.
To be sure, much ado has already been made about China’s apparently advanced plans for a digital yuan, and some influential American officials have recently been expanding their calls for similarly taking the U.S. dollar to the blockchain.
In the same vein, the latest digital currency buzz hails out of Europe, or in Turkey’s case the edge of Europe.
That’s because two notable developments have materialized this week, the first being that a European Union draft document has been created to propose the E.U. develop its own digital currency, and the second that Turkey’s central bank-backed digital lira project is set to complete its first trials by the end of next year.
Facebook Libra Lit a Fire Under E.U.
Beyond the ire of U.S. regulators, the Facebook Libra stablecoin has caused a comparable amount of regulatory agitation among top E.U. officials. Yet such agitation has catalyzed these same officials to increasingly consider their political and economic bloc’s own response to the fiat-backed stablecoin.
That dynamic came to the fore again this week as a draft document has been created by Finland’s Presidency of the Council of the E.U. that, if later agreed upon, would intensify cryptocurrency regulatory efforts in the bloc and pave the way for the European Central Bank to release its own answer to the Libra.
“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,” the document reportedly read.
Accordingly, the draft may be formally considered by EU finance ministers as early as November 8th and officially adopted as early as December 5th.
The move comes on the heels of Valdis Dombrovskis, the Executive Vice President of the EU’s executive branch, saying last month that the EU should become a global leader in digital innovation but that such leadership should be approached meticulously. In addressing the European Parliament on October 8th, Dombrovskis said:
“For instance, Europe needs a common approach on crypto-assets, such as Libra. I intend to propose new legislation on this. Honourable Members, the green and digital transformation can only succeed if it is seen as socially fair. This will not happen automatically.”
Relatedly, last week an association of 200 German banks called on the EU to coordinate the development of a digital euro that would have smart contract functionalities.
Will Turkey Beat China to the Punch?
As China’s central bank has ramped up its efforts to build out a digital yuan in recent months, global pundits have wondered if the Asian superpower would be the first nation in the world to have its government roll out a blockchain-based digital currency.
Now, if the latest news out of Turkey is any indication, the race is on.
This week, an official government journal in the Southeastern European and Western Asian nation noted that the country’s central bank is set to complete its inaugural tests around its digital lira project by the end of 2020.
The bid comes as part of Turkey’s campaigns to “offer different financial instruments to a wide investor base through reliable institutions and support Istanbul’s goal of becoming an attractive global financial center,” per the Resmi Gazete journal.
The development and trials of the state-backed digital currency comes after the initiative was prioritized in the country’s economic roadmap that was released back in July. Beyond the government’s blockchain efforts, cryptocurrency interest has spiked in Turkey over the last year after the value of the Turkish lira acutely tanked last fall.