Facebook’s cryptocurrency project, Libra, could be used to build on top of central bank digital currencies. That’s what the venture’s co-creator and head economist reiterated today at a FinTech conference in Singapore. Interestingly enough, the statement also comes at times when a few countries are contemplating the launch of their own state-backed digital currencies.
Libra Improving State-Backed Digital Currencies
Christian Catalini, Libra’s co-creator and head economist of Calibra, spoke in Singapore at a FinTech Festival today about Facebook’s projected cryptocurrency. According to him, Libra could not only co-exist with the upcoming central bank digital currencies (CBDC), but it could build on top of them:
“From the start, it was clear to us that eventually, central banks will be issuing some flavors of central bank digital currency, and we wanted the system to be future-proofed for that. In fact, Libra would have built on those central bank digital currencies.”
During his speech, Catalini also addressed the concerns behind Libra’s backing. He said that the cryptocurrency’s reserve represents a complement to monetary policy and that the assets behind it are managed, controlled, and generated by central banks.
Libra’s Impact On CBDCs
Libra was first officially introduced back in June and it took the world by a storm. The project also attracted serious regulatory attention with legislators across the world battling to take a stance on the matter.
It’s also interesting that a draft document of the European Union implies the creation of a new coin that would compete with Libra. In other words, state-backed cryptocurrencies are starting to get more traction.
Another example comes from China. Earlier this year, it was announced that the central bank will launch a government-backed cryptocurrency to be distributed to certain major institutions and corporations in the country. Additionally, the vice-chairman of the China Center for International Economic Exchanges said that their product will be a first market mover.
Just today, Mu Changchun, head of the People’s Bank of China’s digital currency research institute, reassured the public that they will be creating a balanced currency:
“We know the demand from the general public Is to keep anonymity by using paper money and coins […] we will give those people who demand it anonymity in their transactions. But at the same time, we will keep the balance between the “controllable” anonymity and anti-money laundering, Counter-terrorist financing, and also tax issues, online gambling, and any electronic criminal activities.
In any case, it does appear that Catalini’s comments are properly timed and they do seem to follow the trends in the field.