Facebook’s Libra could solve two major issues currently present in global payment systems, an European central banker said in the German parliament on 25 September.
During a hearing of the Committee on the Digital Agenda, Benoit Coeure, ECB board member and chair of the Committee on Payments and Market Infrastructure, said that Facebook’s stablecoin could give access to basic payment services to billions of unbanked individuals around the world, and at the same time make cross-border payments cheaper, faster and more transparent.
By latest estimates, 1.7 billion people around the world do not have access to basic payment services, even though 1.1 billion of them have access to a mobile device. During his speech, Coeure said that current cross-border retail payments are “generally slower, more expensive and more opaque than domestic payments”, even though they are crucial for global commerce, and for migrants that send remittances to their home countries. He said:
“All things considered, Libra has undoubtedly been a wakeup call for central banks and policymakers. Global “stablecoin” initiatives are the natural result of rapid technological progress, globalisation and shifting consumer preferences. The demand for fast, reliable and cheap cross-border payments is bound to grow further in coming years. Policymakers and central banks should respond to these challenges.”
Even though Libra could solve these issues, Coeure added, it will also raise a number of concerns, as it could be used for money laundering and financing terrorism, not to mention concerns over consumer protection, data security, network stability and competition. He also said that a new approach is needed in order to regulate this new product.
His comments indicate that Libra could finally be welcomed by the central bank, but on the condition of tight supervision. Some countries in Europe will still need convincing though. Earlier this month the French Economy and Finance Minister Bruno Le Maire said that he plans to block the stablecoin in the E.U., as it could pose a threat to the sovereignty of national currencies.