Central banks ‘spurred’ by Facebook’s Libra to explore CBDCs

The prospect of social media giant Facebook, now Meta, launching its own cryptocurrency, Libra, “spurred” central banks to pay “greater attention” to digital money, according to panellists at Open Banking Expo’s Central Bank Digital Currencies virtual Confex yesterday (10 March).

Among the speakers taking part in the first panel session of the day, titled ‘CBDCs – Are we ready to take this game changer from concept to reality?’, was Lee McNabb, payment strategy and research at NatWest.

He said that Facebook’s announcement about Libra back in 2018 marked the point at which central banks started to “take seriously” the idea of CBDCs as “a real combat to that”.

Jannah Patchay, policy lead at Digital Pound Foundation, agreed that the prospect of Facebook launching a cryptocurrency “first piqued” central bank interest, and “spurred” central banks to pay “greater attention” to the inevitable rise of digital money.

Digital Pound Foundation’s Jannah Patchay

She added: “The use cases for these new forms of digital money already exist and are being implemented by the private sector.”

Patchay and McNabb were joined on the panel by Cyrielle Chiron, chief strategy officer at Payments Canada, who said that many central banks have either launched, or are exploring the launch of, a CBDC in order to “remain competitive” and “relevant”.

She added that while there are many aspects of CBDCs that “still need to be researched”, the regional work being done by different jurisdictions could help to “drive globalisation of payments”.

Also on the panel, which was moderated by Token Intelligence and Remaking Money founder Barry James, was Mathias Studach, a member of the executive board at SIX Digital Exchange.

Studach predicted that in terms of the “evolution” of CBDCs, “we’ll see a coexistence between traditional infrastructure and DLT [distributed ledger technology] based infrastructures”, adding that “interoperability is the key challenge”.

In the UK, the Bank of England is still exploring a potential CBDC.

If the UK were to implement a retail CBDC, Jannah said given that the public “tend to trust their governments a lot less than private corporations”, there are several considerations that need to be built into the design “if it is to have public uptake”, including “greater input from consumer groups and privacy advocacy groups”.

McNabb suggested that the work by Sweden’s central bank on the e-krona is “fascinating”, and “a direction you could argue the UK is going in, but [is] still some way off”.

To register for Open Banking Expo’s Central Bank Digital Currencies virtual Confex and watch all the sessions back, click here.