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Libra pushed central banks towards digital currency, says ex-BoJ chief

By Lawrence Gash

As six central banks agree to share CBDC information, Hiromi Yamaoka admits role of Facebook's crypto project

Libra provoked central bank interest in digital currency former BOJ executive says

Facebook’s (FB) Libra project accelerated central bank interest in the idea of digital currencies, particularly central bank digital currencies (CBDC), Hiromi Yamaoka, a former head of the Bank of Japan’s (BoJ) division overseeing payment and settlement systems, has admitted.

Announced last year, the Libra Association launched with notable founding members including Spotify, Uber, PayPal and Mastercard with Facebook spearheading the project to develop a major stablecoin.

Many central banks felt threatened by the possibility of an alternative means of exchange, facilitating cross-border payments with serious corporate backing and the potential to be made available to Facebook’s existing 2.45 billion users.

By the end of the year many central banks had accelerated their research and development into digital currencies, with China vowing to lead the way.

The central banks of Canada, the eurozone, Japan, Sweden and Switzerland announced this week that they plan to share their experiences in developing digital currencies

Reacting to this news Yamaoka told Reuters: “The latest decision (by the six central banks) is not just about sharing information. It’s also an effort to keep something like Libra in check.”

He added: “Something like Libra would make transactions costs much cheaper. Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

Now a board member at IT consulting firm Future Corp, Yamaoka oversaw the BoJ’s research into digital currencies. A 2017 report by the central bank concluded that the technology had not yet matured adequately.

While the technology may not have sufficiently improved in the last 18 months the threat of Libra has accelerated interest in CBDC. By September 2019 the Governor of the Bank of Japan was warning of the potentially “huge impact” Libra would have on societies around the world.

With a number of high-profile names, such as PayPal and Mastercard, leaving the Libra Association in October and Vodafone on Tuesday the threat of Libra seems to have abated somewhat. Even if the stablecoin never becomes a reality it will have jolted many central banks into stepping up the development of CBDCs.

FURTHER READING: Central banks consider launching digital currencies

FURTHER READING: Big tech’s adventures in fintech: the future or a fad?

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