CBDCs Main Topic For Six Central Banks Meeting In Washington This April
Six of the world’s largest central banks including the European Central Bank, and the central banks of England, Canada, Japan, Sweden, and Switzerland will meet in Washington in April in order to discuss central bank digital currencies (CBDC), says the Japanese publishing house Mainichi.
Central Bank Digital Currencies (CBDCs) are not just a topic of discussion among major banking institutions but it is now a priority among global financiers, who previously announced they will be working in a joint effort to examine the possibilities of state-backed digital currencies, and here we are with the first meeting already set for as soon as April.
Initially, the group of central banks cited growing concerns regarding Facebook’s private digital currency Libra, as well as the Chinese domestic CBDC dubbed “Digital Currency/Electronic Payments” (DC/EP), sparked the initiative, although according to the latest announcement some key topics of discussion will focus on challenges around cross-border and cross-industry settlements, as well as defensive solutions against potential cyberattacks.
According to Mainichi, the central banks’ representatives will meet in the U.S. capital amid the International Monetary Fund (IMF) conference and we can expect a report subjecting their intelligence exchange being released in the near future.
Are CBDCs a thing on its own or is it just a counterstrike against Libra?
Putting aside China’s DC/EP which was in the pipeline for some six years now, one could argue that CBDCs are only a thing because of Facebook’s Libra.
In order to stay competitive and upscale their financial instruments into the next level of digitalization, central banks had to accelerate the research for a sovereign digital currency.
As we previously covered in our relative article, CBDCs are not really doing anything different from what central banks already offered anyway. The fact that a CBDC will be run on some sort of a distributed ledger technology might be just a promo tactic to lure younger generations into the traditional power-broking financial system.
As Vitalik Buterin recently asked his Twitter community: “Will CBDC transactions be verifiable on a public blockchain”? and if not, what is the purpose of using them, considering that we already have several digital payments utilities.
The truth lies somewhere in-between, as banks both comprehend the benefits of a decentralized self-sustainable autonomous payments network, and the increased danger of losing their power to private entities such as Facebook, but the fact that Facebook’s Libra has shaken things up to spark the initiative is undeniable.
Read More: Libra: Newly Established Technical Steering Committee (TSC) To Govern Technical Development
A Fed member, Lael Brainard said yesterday that cross-industry discussions are essential to tackle regulatory issues subjecting digital currencies, meaning that the public and private sector must have a common compass.
“Given the dollar’s important role, it is essential that we remain on the frontier of research and policy development regarding CBDCs” Brainard added during his speech at in California.
What banks are afraid of the most, is Facebook’s already established network of over 2 billion active customers. Just imagine what happens if one day Facebook introduces Libra the same way it introduced likes, comments, and fan pages. People will simply start using it one way or another, and that is a downer for the outdated financial regime.