European Central Bank: stablecoins like Libra could challenge the dollar

Yesterday Benoît Coeuré, a Member of the Executive Board of the European Central Bank (ECB), made a speech on crypto-assets, Facebook’s Libra, and stablecoins. He put forward the idea that such currencies could overtake the US Dollar as the dominant global currency. Benoît Coeuré is also the head of the Bank of International Settlements’ (BIS) Committee on Payments and Market Infrastructure, which focuses on financial stability. His speech comes at a crucial time since it was reported that he chaired a meeting between Libra representatives and 26 central banks two days ago.

Could Libra be the new international currency?

Libra, Facebook’s upcoming blockchain-based currency, has sparked intense discussion over regulation of cryptocurrencies. As a stablecoin, backed by a reserve, it has far more chance of challenging USD, according to Coeuré. He points out that the Euro, Yen, and Renminbi have failed to rise to the level of use of the US Dollar. It denominates nearly half of global trade beyond the US, far more than of the country itself (11%). This is despite that the Eurozone is the world’s largest trading bloc (14%), and China is the leading trader of goods.

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