A European Central Bank (ECB) policy maker is urging banks in the area to find alternatives to Facebook’s proposed cryptocurrency Libra, according to a report by Bloomberg.
Jens Weidmann said banks should come up with their own cheaper and quicker systems to move money around, to create different options than Facebook’s Libra. He also said the bank doesn’t yet need to develop its own currency.
“I’m not in favor of always immediately calling on the state” to come up with solutions, Weidmann said Thursday (Jan. 2). “In a market economy, it’s up to companies to develop products that meet customer demands.”
Weidmann, who is president of Germany’s Bundesbank, urged area banks to be cautious about cryptocurrency from the private sector, a concern shared by various regulators and countries around the world.
The head of the ECB, Christine Lagarde, has said the idea of the central bank launching its own cryptocurrency is something worth considering, a view shared by Bank of England Governor Mark Carney. Lagarde said the question of whether central banks should develop digital currencies may be part of a far-reaching strategy review set to begin this month.
Weidmann said he wasn’t against the investigation of creating of a digital currency, but he said it is important to examine all sides of the issue. All digital currency, he said, should be carefully examined to make sure they won’t be used for money laundering or other illicit activities.
Last month, Federal Reserve Gov. Lael Brainard outlined key risks associated with cryptocurrency in general and Facebook’s Libra in particular.
A member of the Board of Governors of the Federal Reserve System, Brainard spoke at the ECB colloquium in Frankfurt on “Monetary policy: the challenges ahead.” The event was in honor of ECB Executive Board member Benoît Coeuré.
“At the start of Benoît’s ECB term, bitcoin’s market capitalization was small, and only a handful of cryptocurrencies existed. In the eight years since then, bitcoin’s market capitalization has grown rapidly and now exceeds 100 billion euros, and thousands of cryptocurrencies have been created,” Brainard said in her speech.