EU draft: central banks should look at public digital currency

Yesterday, Reuters reported that the European Union issued a document recommending the exploration of consumer digital currencies by its central banks. The leaked draft, obtained by the news firm, further says that financial authorities should build standardized regulations for cryptocurrencies. Supposedly influenced by the controversial launch of Facebook’s Libra, it reads: “The ECB [European Central Bank] and other EU central banks could usefully explore the opportunities as well as challenges of issuing central bank digital currencies [CBDCs] including by considering concrete steps to this effect.”

Global reaction to stablecoins

Indeed, the ECB’s Benoît Coeuré said that stablecoins, like Libra or China’s upcoming digital currency, could challenge the US dollar. He outlined that the concern caused by Facebook’s announcement this summer “has undoubtedly been a wake-up call for central banks to strengthen their efforts to improve existing payment systems.” A few days later, the International Monetary Fund explained the possible risks of such stablecoins to global finance. The G7 Working Group Report on Stablecoins, produced by the Bank of International Settlements (BIS), went further in saying that they represent “systemic risk”.

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