March 8, 2021

ECB named new threat to national currencies

Fabio Panetta, a member of the Governing Council of the European Central Bank, said that fiat currencies could serious risks as early as January 2021.

The emergence of Facebook's Libra Staples could pose a threat to national currencies, according to the European Central Bank (ECB).Fabio Panetta, a member of the governing council of the financial regulator, said at the Bundesbank conference that Libra users would beto carry high credit and market risks, as well as liquidity risks, and the release of the token threatens"potential systemic consequences," Finextra writes.

Panetta stressed that after the release of the social network stablecoin, which is scheduled for January 2021, the ECB will be forced to "reinvent sovereign money".

“Libra could threaten monetarysovereignty. This can happen if stablecoins issued by corporations replace fiat currencies as a means of payment, ”the representative of the financial regulator emphasized.

He added that experiments are now underway toissuing the digital euro. In particular, the compatibility of the new currency with the existing settlement services of the Central Bank is being checked, the relationship between DLT technologies and centralized systems is being studied. Among other things, the ECB is considering the use of dedicated payment blockchains with electronic identification and evaluating the functionality of hardware devices that could enable autonomous and confidential transactions.

Today, November 27, the Financial Times reported thatFacebook may unveil its Libra cryptocurrency in January next year. However, this digital asset will initially be issued in a “limited format,” meaning only one stablecoin pegged to the US dollar will be presented. The release of the rest of the cryptocurrencies is possible in the future.