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Facebook’s Libra is not a popular digital currency in the crypto community, even though it hasn’t even launched yet. However, even if Libra falls flat on its face, a new global digital currency may enter the scene, said a European think tank’s President Beatrice Weder di Mauro.
Libra will not get the green light
Facebook’s Libra lead David Marcus appeared for two hearings on Capitol Hill in July. On Wednesday, Congress scheduled another hearing for Facebook CEO Mark Zuckerberg to talk about his project and its possible effect on the global financial system. Both Marcus and Zuckerberg have defended the idea of Libra and even called it the US’ answer to growing Chinese cryptocurrency influence.
However, Beatrice Weder di Mauro, the president of the Center for Economic Policy Research said Libra might not pass regulatory review. Talking to CNBC, she added,
“What libra has done is … it has shaken up the central banking community” because it presented the idea of a privately created, globalized digital currency that could be adopted very quickly. She said, “This is also why it’s probably not going to happen, because there is, you know, the regulators are right now saying we are not going to allow it.”
Lawmakers are not satisfied with any argument that Facebook has presented to date about its digital currency. Given that Libra rollout could be very quick and very efficient, central bankers are not just nervous, but they are also threatened with the possibilities.
Is the world ready for Libra?
Even though Libra may not qualify for becoming the first global digital coin in the world, it has opened up this space for other coins. According to Mauro, the possibility of another private sector company or a collaborative project by some central banks to create a globalized digital currency are higher than ever before. Nothing is stopping a central bank, or a group of banks, from floating a widely accepted digital currency that doesn’t threaten the global financial system and faces the same checks and balances as any other currency.
The Chinese central bank is rumored to be working on such a solution. The People’s Bank of China is reportedly working on a digital Yuan that could further assert its power in the world of digital currencies. Mauro added that a global financial system with digital currencies could have several advantages over the existing mechanisms.