The European Union is considering launching a digital currency that would help it combat the direct threat of cryptocurrencies and also make projects like Facebook’s Libra appear redundant.
“The ECB and other EU central banks could usefully explore the opportunities as well as challenges of issuing central bank digital currencies including by considering concrete steps to this effect,” said an official draft seen by Reuters.
EU finance ministers will discuss the document, which was prepared by the Finnish EU presidency and subject to possible amendments, in the run-up to and during their next meeting on December 5.
European regulators have united in pursuing a tough regulatory approach should Libra seek authorizations to operate in the 19-country bloc. They spoke about serious implications for financial stability if authorities lost control over the phenomenon and called for a common set of rules for crypto assets, but none of them has properly taken off so far.
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Europe joins others exploring a digital currency
However, ECB’s thinking on a proprietary digital coin emerged again after Facebook dropped the secrecy surrounding its in-the-works cryptocurrency, or Libra, which heightened concern over the implications of digital money.
Overall, while the world’s largest social media platform is laying the groundwork for its ambitious push into payments, European regulators are seemingly skeptical as to its crypto offering, which also involves a wallet called Calibra, would fall under its scope.
ECB board member Benoit Coeure emphasized this approach when he described Libra as “a wake-up call” that triggered a rethink to widen the uptake of the central bank’s project for real-time payments in the eurozone, known as TIPS.
While almost all global regulators have expressed serious concerns about FB’s proposed stablecoin, Europe isn’t the only region exploring a digital currency. Switzerland, Canada, and Singapore have also started exploring the use of digital currencies and their research efforts underway. China, however, appears ready to be the first to launch a government-backed cryptocurrency, with plans to have its own coin up and running either late this year or early next.