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German Central Bank: “Be Neutral on Facebook’s Libra”

By Mark Lemon – Cryptocurrency Specialist

In spite of regulatory uncertainty and possible risks, the central bank of Germany advises the government not to overlook the potential benefits of Facebook’s Libra, as reported by CoinTelegraph.

On July 22nd, a monthly bulletin known as “Crypto tokens in payment transactions and in securities settlement” was released where the Bundesbank considered every possible advantage and shortcoming of Central Bank Digital Currencies (CBDCs) and stablecoins. Bundesbank appears to be one of the few that could be for buying and selling crypto such as Libra.

Bundesbank Wishes Libra’s Regulation to be Technology-Neutral

Bundesbank states in the document that new worldwide projects like Libra must not be ignored as they hope to increase transaction and prosperity costs.

However, in order to do that, the bank believes global regulators must ensure that security and financial stability among other important standards are not negatively impacted, and those payment transactions are not affected. Anyone around the world can buy and sell Bitcoin which is why regulators should take a global approach to ensuring the security of users.

The bank also emphasised that the regulation must also not discourage innovation:

“A government should be as technology neutral as possible, so that the benefits of innovation can be made available for the financial sector.” The financial sector is heavily regulated and innovative technology is crucial for them to keep up with the demand of commercial and personal users. If regulation stifle’s technological innovation, then the user could suffer as a result which in turn could encourage them to buy and sell cryptocurrency. 

The bank said that several important organisational, technical and regulatory questions regarding the Libra Association are still open, even though there is skepticism regarding its potential benefits. The bank also reiterated that global central banks and supervisory authorities should continue probing and evaluating the project.

Stablecoins and CBDC’s Can Affect Central Banks

Bundesbank, in the document, believes stablecoins and CBDCs to be two of the biggest recent developments that can have an impact on the role of global central banks.

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