BoC: „Central banks must have their own digital currencies ready in case Libra fails“

Canada’s Central Bank’s Timothy Lane says central banks need to be ready with their own digital currencies.

According to a report in the Canadian press on October 15, Timothy Lane, vice director of the Central Bank of Canada (BoC), is urging the world’s central banks to have their own digital currencies ready in case governments and regulators hit the global Facebook Ban cryptocurrency Libra.

Such a system would also be an important step in the fight against the Corona crisis

Lane made the corresponding remarks during a panel discussion at the Central Banks Conference. In this regard, he states that his financial institution is already working on its own central bank digital currency (CBDC) and is taking „big steps“ in the process. However, he admits that the central bank must first ask the Canadian population what they expect from such a digital currency.

The deputy central bank chief praises the efforts of Facebook Libra, because they would ensure that cross-border payments are made more efficient in the future, which, according to Lane, could especially help the “bankless” people in developing countries to participate in the global economy.

From this he concludes:

“That’s the whole point: whether we want Libra or a central bank to do these functions, but if we want it to be a central bank digital currency and not Libra, then we have to have something in hand so that we can be direct can get started. “

Lane’s words are a change of position on his stance before the corona crisis, because in February he said that there would be „no good reason“ for the introduction of central bank digital currency. In addition, the „Bank of Canada“ had a study published in which it as „risky“ rated CBDCs in the face of competition between crypto exchanges and banks.

The Financial Stability Board (FSB), the financial authority of the G20 countries, has meanwhile issued recommendations on the legal treatment of stablecoins such as Libra. The authoring working group believes that stablecoins could become “systemic” in many countries and could undermine the effectiveness of governments‘ monetary and financial policies.

As Cointelegraph reported on October 12th, seven G20 member states are rejecting the introduction of global stablecoins such as Facebook Libra as long as there are no corresponding regulations for them. At the moment it would still be questionable how it can be ensured that these digital currencies are in accordance with the regulations for anti-money laundering, consumer protection and other legal issues.

„The progress is not that we overturn the system or compete with it, but that we offer consumers a further payment method and complement the existing system,“ as Libra chief lobbyist Julien Le Goc tries in the same panel discussion, the waves to smooth.