Following months of intense scrutiny and backlash from regulatory bodies and governments, Facebook is reportedly considering reorganizing its proposed Libra payment project to include central bank digital currencies (CBDC) pegged to major sovereign currencies.
Facebook’s Libra Might Play Host to Multiple CBDCs
According to Bloomberg, inside sources at Facebook say a redesign of the project’s wallet is currently ongoing as part of efforts to smoothen the litany of regulatory wrinkles caused by the proposed digital currency platform. In addition to Libra’s proposed token, the project may also include other digital tokens, like CBDCs from different central banks.
While the proposed amendment may look like the Libra Consortium is moving away from its initial plan of creating a universal payment network easily accessible to billions of people, the Association’s policy and communications head, Dante Disparte, said the goal remains unchanged with Facebook reiterating its support for the project.
The unveiling of the Libra whitepaper back in June 2019, sparked reactions from regulators and governments globally. In the U.S., lawmakers called for a moratorium on the project until the creators provided more information to regulators. Facebook’s past privacy scandal helped to intensify scrutiny.
With the hurdles and oppositions coming from different jurisdictions, in July 2019, Facebook stated that it might be almost impossible to launch the project in 2020. Many early backers like PayPal, eBay, Mastercard, Stripe, and Visa among others, have exited the Libra Association.
Ripple’s Brad Garlinghouse, in October 2019, declared that the project might not see daylight till 2022. However, two new companies, e-commerce giant, Shopify, and Tagomi Holdings, recently joined the Association.
CBDCs As a Counter to Facebook’s Payment Project
Among from privacy concerns and lack of clarity expressed by concerned entities, most governments, central banks, and regulators believed that the Libra coin was capable of taking over the global financial scene and displacing several sovereign currencies.
One of the most vocal voices on this matter was France’s Finance Minister, Bruno Le Maire. According to the French government official, Libra constitutes a threat to sovereign currencies and should not be allowed to develop.
The Bank for International Settlements (BIS) back in June 2019, also stated that Libra could threaten the global financial system. Another warning came from a former Bank of Japan (BoJ) executive, Hiromi Yamaoka, directed at central banks. Yamaoka warned that Facebook’s virtual currency could undermine the control central banks have over monetary policies.
The announcement of the Libra crypto has spurred central banks globally to create state-owned virtual currencies. Apex banks in different jurisdictions are either researching or developing CBDCs to counter Libra.
China’s central bank, the People’s Bank of China (PBOC) is at the forefront of the CBDC race. The PBOC is racing to develop its digital yuan to combat Libra adoption in China, which the country is hoping to launch in the nearest future.
Furthermore, the German Finance Minister applauded the idea of the EU issuing a digital euro to tackle Libra. As reported by Blockonomi back in January 2020, Jens Weidmann who doubles as the president of Germany’s central bank and policymaker for the European Central Bank (ECB), urged European banks to come up with a solution to combat Libra and other private tokens.