German Central Bank Chief Calls For Caution in Developing CBDCs

Jens Weidmann, the President of the Deutsche Bundesbank, has weighed in on the prospect of allowing Facebook’s Libra stablecoin project in the country, as well as the efforts of countries with implementing Central Bank Digital Currencies (CBDCs).

In an interview with local news medium Handelsblatt yesterday, the policymaker gave his opinions on Libra first, explaining that should be ways to come up with alternatives to the currency that will be faster and much cheaper to implement for their customers. However, as opposed to what many countries are doing right now, he explained that governments aren’t the solution to this problem.

Private Firms should take the Lead

As he put it, most developed countries operate in capitalist economies, and one of the foundational principles of this economic model is that private companies are the ones to come up with solutions that will meet the demands of users.

“In a market economy, it is first up to the company to develop a suitable offer for customer requests,” he said, while also adding that if there is ever the need for a digital Euro like several European policymakers have called for, then governments should be given the leeway to make investigations into these assets and look into the pros and cons that they could bring.

The prospect of the European Union launching a digital currency for making money transfers within the economic bloc has been championed by several people, including and especially Benoit Coeure, a Director of the European Central Bank (ECB), and French Finance Minister Bruno Le Maire. Both men have openly called for the creation of a “EuroCoin,” which they believe will help them- and their citizens- operate in the digital asset space without the need for Libra.

No One Wants Libra

Christine Lagarde, the President of the ECB, has also called on the financial regulator to stay ahead of the curve as regards stablecoins, and has promised to explore the implications of CBDCs on European economies going forward. However, considering that several reports have outlined that stablecoins could have some terrible implications on privacy and economic policy implementation, several top policymakers have called on Libra to be abolished from the European Union and for it to never be released.

Last week, Swiss President Ueli Maurer explained that Libra has “failed” in its current form, adding that the chances of the stablecoin getting regulatory approval the way it is right now are slim to none.

Maurer especially called the asset peg of Libra into question, asserting that Central Banks all over the world won’t allow an asset that is pegged by so many fiat currencies to operate in their jurisdictions.

Regardless, Facebook is continuing in its mission to launch its stablecoin. The company has dealt with the loss of several members of its Libra Association, but no indications have given cause to believe that it could be shutting down the asset.