Central bank group appoints leader for new digital currency unit

Governments intensify rush to get ahead of Libra

                                

The Bank for International Settlements (BIS) has appointed Benoit Coeure as the head of a new unit devoted to producing public alternatives to private digital currency developments, such as Facebook’s Libra.

Owned by 60 central banks, the new BIS Innovation Hub is part of an initiative to tackle private sector innovations in monetary and payment systems.

Whereas governments usually welcome innovation, they have fiercely opposed the idea of alternative methods of exchange provided not by states but by corporations.

Coeure currently works for the European Central Bank and has been an executive board member with oversight of payments systems for almost eight years. In a statement he said: “I look forward to bringing my expertise to the global central banking community at this time of rapid technological change. We must make the best use of innovation to support financial stability and promote financial inclusion.”

The announcement of the development of Libra earlier this year intensified central bank’s interest in digital currencies, a digital asset created by Facebook and a number of other major companies. Libra promises to facilitate cross-border payments, bringing financial services to the remaining “unbanked” people of the world.

With Facebook’s ready-made userbase of 2 billion users, Libra’s announcement has been taken more seriously than other alternative currencies.

The US Senate banking committee has grilled senior Facebook executives, including CEO Mark Zuckerberg, on a number of occasions. And in September, the finance ministers of both France and Germany provisionally agreed to block Libra’s introduction, stating: “no private entity can claim monetary power, which is inherent to the sovereignty of nations.”

This view has been supported not just by politicians and central bankers but also some major business leaders. Last month, Apple CEO Tim Cook told the French newspaper Les Echos: “I really think that a currency should stay in the hands of countries. I’m not comfortable with the idea of a private group setting up a competing currency.”

FURTHER READING: Facebook Libra explained

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