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    Facebook’s Libra Stablecoin Put Central Banks On Notice, Causing Bankers To Look Into CBDC's

    A former Executive of the Bank of Japan (BOJ) has said that Facebook’s Libra prompted Central Banks to invest more resources in Digital Currency research sooner than expected. According to a report by Reuters on Jan 22, Hiromi Yamaoka, a former head of settlements and payments at the BOJ, noted that regulators might have done so to keep Libra in check besides tapping into opportunities in blockchain.

    The regulation of digital currencies is still a grey area in FinTech; central banks across the world are yet to figure a proper regulatory ecosystem. However, efforts are underway by a number of regulators in developed economies to address the underlying challenges in token economies. So far, countries like Switzerland, Sweden, Canada, Japan, Britain and the Euro Zone have already agreed to work collaboratively on the use case of digital currency. Yamaoka implied:

    “The latest decision is not just about sharing information. It’s also an effort to keep something like Libra in check […] Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

    Hiromi told Reuters, Central Bankers have to keep up with the incentives that come with digital payments and settlements;

    “Something like Libra would make transactions costs much cheaper. Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

    Central Bank Digital Currencies (CBDC) in Monetary Policy

    Hiromi currently a board member with IT consultancy giant, Future Corp, is still in touch with policy implications having worked at the BOJ. He countered the narrative by some academics who recently argued that CBDC’s could be used to driven interest rates further down to negative values. Hiromi said,

    “There are increasing doubts about the effect of negative interest rates as a policy tool.”

    “If so, do you want to issue CBDCs for the sake of deploying a policy with questionable effects?”

    As it stands, China is the most advanced in terms of research and a CBDC development for its ecosystem. The project is expected to launch in 2020 although not much has been revealed about its specifics. Peer economies like the Euro Zone and Japan have instead focused on blockchain implementation noting that they have no short-term plans to issue a digital currency.

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    Lujan Odera
    Lujan Odera
    Lujan is a blockchain technology and cryptocurrency author and editor. He has worked in the field of cryptocurrencies and blockchain technology since 2015 helping him gain enough experience to be the writer he is today. He is known for his simple writing style that allows novices to understand the field in the simplest way.

    [Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

    [Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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