Central Banks May Be “Bluffing” The Issue Of Their Coins: Report

The recent headlines in the cryptocurrency news show that central banks around the world are planning to or in the process of creating their own digital currencies. These coins, by their disruptive nature, are seen as something big and something that would attract the attention for people. 

With Facebook’s plans to launch the Libra coin, there are even more challenges to their monetary authority and uncertainty about how the money will be used in the years to come. One report from the Financial Times shows that despite all the good talks, central banks may be in a state of “elaborate bluff” about the launch of their own coins.

It was Christine Lagarde as the member of the European Central Bank (ECB) who gave a contradictory position this week, telling the European Parliament that central bank-issued digital currencies (CBDCs) were “an area where we don’t have to rush slowly” (in her own words).

“There is clearly a demand and there is clearly a technology that would support it, but clearly there are also risks for the international monetary system and financial stability at large,” she added.

According to Lagarde, central banks may be bluffing their moves about this. Even though the Libra news recently showed that the stablecoin can make payments quicker, cheaper and easier for the 2.5 plus billion users that Facebook has, reports show that the main concern around Libra is that it may dilute the main power of central banks – which is their ability to control the supply of money.

Benoît Cœuré, who is the ECB director leading the G7 working group on the Libra, recently likened Facebook’s digital currency to an “elephant in the sandbox” and the French finance minister Bruno Le Maire also added that the country could ban the Libra soon.

In a speech earlier this year, Benoît Cœuré touched on the possibility of the ECB issuing its own digital currency and said  that “potential central bank initiatives should not discourage or crowd out private market-led solutions for fast and efficient retail payments in the euro area.”

Still, central banks may be bluffing this and with all the contradictions being apparent, this could just be a distraction as they secretly hope for the private sector to come up with solutions that make issuing a CBDC unnecessary altogether.