With Libra, Facebook is hitting international governments and central banks around the world. The international debate on cryptocurrency is fully open again, and central banks are considering whether they should develop their own digital currency. De Nederlansche Bank has now also written an article on this subject.
Do stablecoins pose a threat?
The article focuses primarily on stablecoins. These are crypto coins whose value is linked to a currency such as the euro or the dollar. It is striking that DNB never once appoints Tether. Tether is currently the most used stablecoin.
At the time of writing, there is even more trading in Tether than in bitcoin, according to data from Coinmarketcap. That’s because crypto dealers use Tether to trade. At fairs such as Binance you can easily exchange an altcoin for Tether. You can then purchase another altcoin from it.
Unlike Tether, DNB names Facebook’s Libra as the best-known initiative. In addition, tech companies such as Apple with Apple Pay are also active in international payments. Finally, JPM Coin is also mentioned, the new crypto currency of the American bank JP Morgan.
DNB does see a threat in these currencies. According to DNB, trust in the euro is crucial. Coins from Facebook and Apple are a completely new terrain. In addition, the DNB still sees a danger. The Libra can ensure that the effects of monetary policy are reduced. Libra then takes this power away from (central) banks.
Should the ECB then spend a digi-euro itself?
DNB now plays an active role in investigating a Central Bank Digital Currency for the European Central Bank (ECB). The Financieel Dagblad spoke with a spokesperson for DNB: “There was little support for a CBDC within the Eurosystem for the time being, but the topic has been put back on the agenda due to recent developments in the domain.”
If there is to be a Libra, but from ourselves, that is how you can see the position of DNB and ECB. DNB and the ECB are certainly not the first, China and Turkey are already actively involved with their own CBDC.
Standard counterarguments
DNB encourages developments such as Libra, but also mentions many risks. And those are actually the well-known risks that you read in the newspapers when it comes to cryptocurrency. Concerns about money laundering, terrorist financing, tax evasion and privacy. You can almost turn it into an anti-crypto bingo (nice tip for the holidays).
For example, money laundering via bitcoin is not wise. Check it out, all data on the bitcoin blockchain can be found publicly. A bitcoin receiving address seems anonymous, but can be linked to an identity with some difficulty.
The moment you want to exchange your bitcoin for euros or dollars you must be able to identify yourself with a cryptocurrency broker. Future legislation on crypto brokers and exchanges should make it virtually impossible to exchange bitcoin anonymously for other currencies.
The impact of cryptocurrency on terrorist financing is also unclear. The same argument applies here as with money laundering, transactions can be traced publicly via the blockchain. Yaya Fanusie analyzes illegal transactions, and he told the US Congress last year: “Cold hard cash is still king.”
More mature market
But no matter how you look at it, the fact that DNB also writes about this development is certainly interesting. Cryptocurrency is the talk of the day in the financial world. It is a sign that the market is becoming more mature.
And the Libra can then be regulated, bitcoin cannot be stopped so easily. There is no Bitcoin CEO who can account for a national government. Bitcoin is decentralized and from everyone.
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