Ever since the announcement of Facebook’s Libra, regulators and governments around the world started taking the concept and possibilities of digital currencies much more seriously. However, even their rush to regulate the sector can barely compare to the interest in crypto that central banks have developed.
The banks’ goal is to try and work hand-in-hand on the creation and issuance of a CBDC, which would be used for international payments between these two countries. The countries’ monetary regulators stated that the idea was feasible and that it would make cross-border transactions faster, cheaper, more efficient, more transparent, and lower risk.
However, the reports do not mention when the CBDC might be launched. Even so, the move remains rather interesting, especially since the HKMA (Hong Kong Monetary Authority) recently denied claims that there is a need for a CBDC. With its central bank deciding otherwise, it would appear that the regulator was forced to change its stance, as well.
CBDCs vs. Libra: The great crypto race is underway
As many likely know, CBDCs are not exactly cryptocurrencies in the purest sense of the word. They are digital, and they are imagined as currencies, but the ‘real’ cryptocurrency, such as Bitcoin, is imagined to be decentralized. This is not the case with CBDCs, which would be under total control by the central banks, not unlike fiat currencies are.
The fact that the banks would still remain in charge of the money served as an incentive to many other regulators and central banks to start looking at the concept in a more positive light. However, despite the fact that many have developed an interest in CBDCs, not a lot of banks and regulators have actually made any real progress on making them a reality.
So far, the People’s Bank of China (PBoC), China’s central bank, is taking the lead, and it might become the first bank to launch its own coin. The original plan was to launch it in late 2019, but the launch was delayed, and it is expected in 2020.
Meanwhile, despite Facebook’s efforts to push Libra, the project has run into numerous regulatory obstacles that have slowed down its progression. But, Facebook continues to push Libra, which provided additional incentive for the regulators to seriously start considering regulations and solutions for issues involving crypto.
"I see the interest in rapidly advancing the issuance of at least one central bank digital currency (CBDC) in order to be the leading issuer globally & get the benefits associated with providing an exemplary CBDC.” – Bank of France Governor— Pomp 🌪 (@APompliano) December 4, 2019
The Great Currency Race has begun!
Furthermore, multiple Asian and European central banks are also joining forces an initiating a joint study of digital currencies in order to try and stay ahead of Facebook, turning 2020 into the year of CBDCs along the way.