Sweden’s Riksbank Official: Facebook’s Libra Points Out Flaws in Central Banks

Gabriel Soderberg, a member of Sweden’s Riksbank, has described Facebook’s Libra as a wake-up call for central banks across the globe. He says cross-border payments are something the world’s policymakers need to catch up on.

Soderberg stated that Libra had shown that there was a demand for something. Something the Central banks have yet to provide: Cheap, efficient cross-border payments.

He continued, noting that, by highlighting this gap, it means that central banks need to think about this. They need to ask themselves how they would proceed with addressing the issue. It’s a problem that the central banks haven’t solved yet, and they need to resolve it with the most security and resiliency possible.

Soderberg, one of Riksbank’s senior economists working on their e-krona project, gave a nod to another cross-border payment focused blockchain. He loosely compared Libra as a “big Ripple” in terms of goals, but obviously, the underlying design varies a lot. Soderberg explained that some things that both parties plan are somewhat similar.

To Libra’s Defense

Libra’s had a rather tough time since its announcement, facing backlash from various central banks and vocal members of the EU. As they received all this backlash, the central banks for Libra have started to speak out to try and defend it.

The Libra Association, now only having 21 members, have officially ratified its charter. This happened this week within the historic city of Geneva. This followed a series of high profile departures of its founding members: Mastercard, Visa, PayPal, Stripe, Mercado Pago, eBay, and Booking Holdings. Some gave the excuse of focusing on internal projects, while others outright stated they held fears of the regulatory backlash.

However, Sweden was already working on an e-krona project for several years now. They’re well known to be “ahead of the pack.” Soderberg stresses this point with his further statements. He says that he didn’t even think Libra showed them something new, at least not to the Swedish bank. He explained that, for them, it was like the emphasis was placed on something they already knew. He stated that they needed to keep swimming with the current to stay on top of events as a central bank. Soderberg says what this all has shown him, is just how fast things are moving.

He stated that the concept of a global currency is far from new. John Maynard Keynes spoke about his concept of it: The Bancor. This concept was brought further, with cryptocurrency exchange named in its honor. Soderberg described the subject as an “old sort of discussion.”

Soderberg even pointed out that Libra inherited the monetary policy of a few wisely chosen central banks. Libra will make use of a collection of major currencies and low-risk assets such as state bonds to back their stablecoin. Soderburg states that thus, the stablecoin’s stability is the state. He finds it interesting that they went to the state to get a stable platform for their private enterprise.