German Central Bank Tells Why Governments Should Take A Neutral Position On Facebook’s Crypto Project
- Central Bank of Germany considers Libra should be allowed to operate
- Many regulatory agencies around the world are very reluctant to allow it to operate
The central bank of Germany, the Bundesbank, released a bulletin in which they say that Libra’s benefits should be allowed despite regulatory uncertainty.
The bulletin was titled Crypto tokens in payment transactions and in securities settlement and it was published on July 22nd, according to Cointelegraph.
Libra Should Be Allowed
The Bundesbank seems to have a more open opinion regarding Facebook’s cryptocurrency project and virtual currency Libra. The Bundesbank explained that regulators around the world should allow Libra to operate.
There are several regulatory agencies around the world that are trying to regulate this digital asset. Libra is the virtual currency announced by Facebook on June 18 that wants to help individuals process transactions, store money or pay for services.
Many regulatory agencies are worried about the effects the digital asset could have on the market, even when it has not yet been officially released. The main worry is that it could become a currency that would compete against fiat currencies around the world.
The Bundesbank has a different opinion regarding this digital currency. They wrote that central banks should be as neutral as possible with new innovations in order to be able to have the benefits available for the whole financial sector around the world. The bulletin reads as follows:
“ […] a government should be as technology neutral as possible, so that the benefits of innovation can be made available for the financial sector.”
Although the Bundesbank is opened to new innovations, they have different questions regarding the way in which this digital asset is going to be working and how the Libra Association is going to influence the whole financial system.
It is worth mentioning that Mario Draghi, the president of the European Central Bank (ECB) said that the Euro is the only legal tender currency in the Eurozone countries and that they will not allow other currencies to compete with it. This is similar to what U.S. regulators say about it as well.
Furthermore, the report released by the Bundesbank considers that CBDCs and stablecoins are very important developments that can affect the role that central banks currently have. Central Bank Digital Currencies have been analyzed by many different financial institutions but they have not implemented this solution yet.
Finally, the information released in this bulletin is in line with what the Bundesbank President, Jens Weidmann, said about Facebook’s cryptocurrency project. He considered that G7 regulators should avoid suspending innovative concepts before their details are clarified.