Timothy Lane, deputy governor of the Bank of Canada, urged central banks to develop their own digital currencies before regulators block Facebook's Libra coin. Libra has faced regulatory scrutiny for
Timothy Lane, deputy governor of the Bank of Canada, urged central banks to develop their own digital currencies before regulators block Facebook's Libra coin.
Libra has faced regulatory scrutiny for eighteen months. Facebook and its consortium of partners engineered the stablecoin to serve unbanked and underbanked populations across the globe, offering quick and borderless financial services. Governments in Europe, the United States, and other countries have opposed the coin, creating obstacles to its global deployment.
Lane made his case during an online panel at the Central Bank Payments Conference. Should a regulator ban Libra in its jurisdiction, central banks in those countries should have their own digital currency ready to deploy. "If we're saying, well, it should be central bank digital currency not Libra, then we have to have something ready so that if a decision were taken that central bank digital currency is the way to go, we would actually be ready to launch it," Lane said.
The Bank of Canada itself is developing a digital currency. Lane reported that the bank moves at a pace that satisfies its leadership. The BoC plans to solicit Canadians' views on the features and design of a digital currency before committing to any launch.
A significant obstacle remains: the Bank of Canada cannot legally issue digital currencies to the public today. Parliament would need to grant it that legislative authority. At present, the bank can only design and issue traditional fiat currency.
Lane also addressed the broader question of urgency. He said no immediate crisis makes it essential for central banks to launch digital currencies now. But circumstances are shifting. Libra's development changed the timeline and accelerated the need for central banks to prepare. "Libra in some sense, suggests that central banks need to get that thinking underway a little bit more rapidly than they have been doing," Lane said.
