Europe, Japan and the United States come together to create a digital currency with which to get ahead of China and Facebook’s Libra

Seven central banks have joined forces with a clear goal: create a digital currency that raises the alternative of reference and that it serves in this way to try to overcome the efforts of the China project and also of proposals such as that of Facebook with Libra.

The European Central Bank, US Federal Reserve, or Bank of Japan There are three of the entities involved, and the objective is to propose a resilient digital currency, accessible at low cost or free of charge and that is created with a clear legal framework.

Entities say this is not a race (even if it seems like it)

The reason for this push to digital currency comes largely as a consequence of the COVID-19 pandemic, which has notably promoted card or mobile payments and has made cash a method of payment that is losing steam.

Europe, Japan and the United States come together to create a digital currency with which to get ahead of China and Facebook’s Libra

Central banks, they say in Reuters, have been studying this alternative especially after the announcement of Libra by Facebook. The status of this project has been changing, and those responsible now intend to launch several “stablecoins” that are backed by legal tender fiat currencies.

For Jon Cunliffe, from the Bank of England – another of the entities involved in the effort – central banks they should avoid private alternatives like the one proposed by Facebook.

Along with the entities mentioned are the Bank for International Settlements (BIS) and the Swiss National Bank, but not the People’s Bank of China. This country already has a pilot project underway with your official digital cryptocurrency (DC / EP), and with it they want to achieve that the scope of the yuan is the same as that of the dollar.

For Kenji Okamura, Japan’s top financial diplomat, stressed that China’s digital currency project “is something we should fear.” Jon Cunliffe added that this initiative is not “a race between central banks”while Benoit Coeure, from the BIS, explained that central banks should take advantage of their position and catch up with the efforts of the private sector.