Facebook’s Libra cryptocurrency is finally nearing its launch date, which could be as soon as January 2021.
According to the Financial Times, Facebook and the rest of the Geneva-based Libra Association plan to launch a dollar-backed stablecoin in the coming months.
The launch of the singular stablecoin is a scaled-back version of the association’s original plan to launch several stablecoins backed by various traditional currencies.
The Libra Association’s choice to postpone a more ambitious cryptocurrency launch is in part due to regulatory and political criticisms.
On Friday at the Deutsche Bundesbank conference on the Future of Payments in Europe, European Central Bank (ECB) executive board member Fabio Panetta criticized the fast-paced issuance of stablecoins from various big-tech firms, reinforcing his opinion that such digital payment options pose great risks to consumers.
“As I have argued previously, stablecoins raise concerns with regard to consumer protection and financial stability. In fact, the issuer of a stablecoin cannot guarantee the certainty of the value of the payment instrument it offers to consumers. Such a guarantee can only be provided by the central bank.”
Panetta goes on to advocate for a fluid and adaptable response by central banks to what he calls the “digital transformation” of payments. The ECB board member stresses that it is central banks who should play the most vital role in determining the trajectory of the currency revolution, not tech giants.
“The digital transformation is triggering a revolution in the financial sector, which will bring innovation but also risks. In particular, big techs and stablecoins could disrupt the European financial system. And while they could offer convenient and efficient payment solutions, they also risk endangering competition, privacy, financial stability and even monetary sovereignty…
As private money goes digital, sovereign money also needs to be reinvented. This requires central bank money to remain available under all circumstances – in the form of cash, of course, but also potentially as a digital euro.”
Despite international backlash, the Libra Association’s 27 members, which includes Facebook, still plan to launch more stablecoins in addition to their dollar-backed coin at a later date.