A Bank of Canada executive urges all central banks to develop their central bank digital currencies (CBDCs) if Libra gets blocked by regulators.
Timothy Lane, deputy governor of the Bank of Canada (BoC), is advising central banks worldwide to have their CBDCs in place should regulators block Libra coin. Facebook and its partners have been working on the digital currency for the past year and a half but continue to face regulatory challenges from various countries worldwide.
Facebook’s Libra coin will help the underbanked and unbanked regions of the world gain instant and fast financial services. It would also follow the path of cryptocurrencies in making it easier for people to carry out cross-border transactions. However, as a stablecoin that intends to achieve global coverage, Libra has been facing challenges from regulators in Europe, the US and other parts of the world.
Due to the challenges, Libra might find it hard to achieve its desired level of adoption. Suppose regulators block Libra in a given country due to regulatory concerns. In that case, Timothy Lane advises central banks in those countries to have their own digital currency ready for their citizens to use.
“If we’re saying, well, it should be (central bank digital currency) not Libra, then we have to have something ready so that if a decision were taken that central bank digital currency is the way to go, we would actually be ready to launch it,” the BoC exec added.
While addressing an online panel discussion hosted by the Central Bank Payments Conference, Lane pointed out that the Bank of Canada has been working on its digital currency, and they are happy with the pace they are moving. Lane added that the BoC would consult Canadians to hear their opinions on the features they want their CBDC to have.
Currently, the BoC doesn’t have the legislative power to provide digital currencies to its citizens. It is only available to design and develop fiat currencies. However, as the need for digital currencies continues to arise, the BoC might be granted Parliament’s legislative authority to issue a CBDC.
In a separate online panel, Lane argued that there is no urgent need for central banks to issue their own CBDCs. However, he acknowledged that circumstances are rapidly changing, primarily due to Libra’s development.
Lane concluded by saying that “Libra in some sense, suggests that central banks need to get that thinking underway a little bit more rapidly than they have been doing.”