The financial industry is one of the sectors that will be disrupted by newer technologies. To answer the changing customers’ needs, more companies and agencies have opened up their arms and embraced new technologies in the hope of better speed and operation costs.
Facebook’s first digital currency project, Libra, has inarguably caused a widespread impact throughout the financial industry. In a struggle to keep control of their power and maintaining the stability of the Government’s issued Fiat currencies, the project involuntary urged Central Banks around the world to work together in order to study the feasibility of digital currency. They also came up with the plan to create ones of their own; hence Central Bank Digital Currency (CBDC) has emerged.
Francois Villeroy de Galhau, Governor of the Bank of France, has commented, “The power to issue digital currency should belong to the central banks, not private companies.”
“In some northern European countries, notably Sweden and the Netherlands, the use of banknotes is falling extremely quickly and they are wondering whether we need to give citizens the right to digital money that is no longer a physical bank note but which has the same quality, notably the security of a central bank,” the governor added.
Central banks are collaborating with European banks to extensively study the Pros and Cons, while preparing to do the test run of central banks issued digital currency soon. When asked whether such digital money could be issued by private companies, Villeroy said: “currency cannot be private, money is a public good of sovereignty.”
Facebook’s Libra was a great example of how central banks see non-government issued digital currencies. Since digital currencies are far more efficient and superior to the traditional banking system, a project like Libra has been treated as a threat and came to a halt. However, it would be interesting to see how central banks will try to stop something with no single point of failures like Bitcoin.
You may also want to read: Deutsche Bank: Chinese Digital Yuan May Replace US Dollar