Central banks unite to study case for digital currencies

Bloomberg

Some of the world’s major central banks are teaming up to assess potentially developing their own digital currencies, acknowledging that their role is being challenged by new technologies and private sector initiatives such as Facebook Inc’s Libra.
A group has been formed in order to “share experience as they assess the potential cases for central bank digital currency (CBDC) in their home jurisdictions,” according to joint statements. The body will be made up of the Bank of England, Bank of Canada, the Bank of Japan, the European Central Bank, the Riksbank and the Swiss National Bank, along with the Bank for International Settlements.
“The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies,” the BOE statement said. It will be co-chaired by BOE deputy governor Jon Cunliffe and former-ECB official Benoit Coeure — now head of the BIS’s innovation hub.
Absent from the group is the People’s Bank of China, which is poised to become the first major central bank to issue a digital version of its currency.
Coeure has previously said he’s “personally pretty sure” that digital tokens backed by public authorities will be part of the future.
The debate around such a currency intensified last year when BOE Governor Mark Carney laid out a radical proposal for an overhaul of the global financial system that would eventually replace the dollar as a reserve with a Libra-like virtual token.
While Facebook’s plans sparked a backlash among governments, Libra raised the question of whether public authorities risk being left behind as consumers turn to private-sector initiatives that skirt the traditional banking system.
ECB policy makers, under the new leadership of Christine Lagarde, have already discussed the idea of issuing their own digital currency. She has long argued that central banks should consider the merits, which she believes include public goals such as financial inclusion, consumer protection and payment privacy.
Internal documents have shown ECB also sees a case for such a move, if the private sector can’t make cross-border payments faster and cheaper. Lagarde could face pushback though, including from Jens Weidmann, who heads Germany’s Bundesbank and has urged caution.
Another key absence from the new group is the Federal Reserve, which has so far largely distanced itself from the concept of a CBDC. In December, Treasury Secretary Steven Mnuchin said he and Fed Chairman Jerome Powell see “no need” for the US to create a digital currency in the near future. Yet Powell has said the Fed is monitoring the activities of other central banks to identify potential benefits.

Vodafone drops Facebook-led cryptocurrency project
Bloomberg

Telecom giant Vodafone Group Plc left the Libra Association, becoming the latest company to exit the Facebook-led group trying to create a new global cryptocurrency.
The Libra Association, which was finalised last October, once expected to have as many as 28 total members when the project was announced in June.
It is now down to 20 following earlier departures from Visa Inc, Mastercard Inc and others that had committed to the project but then left before the group signed an official charter. Vodafone said it plans to focus on own digital payments efforts.

member of the Libra Association,” Dante Disparte, head of policy and communication for the association, said in a statement. “Although the makeup of the Association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient. The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system.”
The idea for Libra — a global, digital currency intended to make cross-border money transfers as easy as sending a text message — has faced opposition at every turn. Facebook, the world’s largest social network, first proposed the idea last June, along with a number of high-profile partners. Many of them are no longer involved, and Facebook has pledged to appease all U.S. regulators before launching the currency. It’s unclear how long that might take.
Coindesk earlier reported news of Vodafone’s departure from the group.
In a statement, U.K.-based Vodafone said it plans to focus on its own digital payments efforts instead. Vodafone partly owns Safaricom Plc, which operates the M-Pesa mobile-payments app in Kenya, where more people keep their money on their phones rather than in banks. The text message-based app is used by about 35 million people globally to spend, borrow and send money to friends and family.
“We will continue to monitor the development of the Libra Association and do not rule out the possibility of future co-operation,” Vodafone spokesman Steve Shepperson-Smith said.