Facebook’s Libra digital coin triggers banks and governments to make an openly funded ‘stable coin’ for a cryptocurrency race, wherein Canada is a significant player.
Central banks and governments around the globe realized that Facebook was making its way to rule over money, with a technological understanding and worldwide reach. The realization was after Jerome Powell from the U.S. Federal Reserve mildly reacted to the announcement of the Libra project.
Government bodies, such as Bank for International Settlements and International Monetary Fund, are gathered to develop the idea. China is joining the race as well in making a tradable and functional digital coin, which is also backed up by their government.
Digital Coins over Real Ones – Will People Still Use Cash?
There’s no assurance that people will cheer up with the upshot since they are used to using money’s current form.
In the recent monetary policy news discussion, Carolyn Wilkins from the Bank of Canada mentioned how she finds the developments, exciting. She also enlightened that the central bank is hoping to make a digital coin, unlike the typical bitcoin and other imitators.
Wilkins also shared about crypto assets known as stablecoins, and how it can address the essential issues such as the price of cross-border payments. This digital money-kind is what conceives the Libra. It can maintain an equitably constant value, unlike bitcoins.
One example suggested by Wilkins, regarding the usage of stablecoin, is when people are sending money anywhere around the globe. It can also be a dependable unit of exchange when used domestically, especially in rising countries with an unstable banking scheme.
Innovation and Risks – The Good and Bad Sides of Stablecoin
Part of the Libra project’s proposal is innovation, wherein it will offer unbanked millions globally. With this purpose, people can sell, buy, and save without the risk of government mishandling and inflation.
There may be risks concerning terrorist financing and money laundering, yet by safeguarding the stablecoin’s value properly for monetary sovereignty is one of its benefits. Innovations always come with risk, as per Wilkins.
Canada to Follow Sweden in Eliminating Polymer Bills
Reported in The Current, under CBC Radio’s channel, the Bank of Canada is eyeing the prospects of following Sweden in disregarding polymer bills, which needs the federal government’s decision before proceeding.
The Canadian government may be reluctant to take a step in switching low-denomination bills to coins.
Timothy Lane, the deputy governor of the Bank of Canada, joined the conference entitled “The Future of Money” at the International Institute of Finance. He highlighted that banks, consumers, and merchants don’t use banknotes, and once it affects the circulation, they will not be able to pay using bills.