Thanks to the pressure being exerted by Facebook’s proposed cryptocurrency Libra, the European Union is reportedly considering the development of a digital currency. A draft document has surfaced urging the European Central Bank to consider launching a digital currency. Document also calls for a common approach by the EU towards cryptocurrency, including banning risky projects.
According to a draft document, the European Central bank is being asked to consider the issuance of a public digital currency. The pressure comes after weeks of regulatory discussion over Facebook’s Libra, which has been met with hostility by U.S. and global lawmakers.
In addition to creating a digital currency, the document also urges the EU to develop a common approach to cryptocurrencies, with the possibility of banning projects that are determined to be too risky.
The document, published in a section of press, reads: ‘The ECB and other EU central banks could usefully explore the opportunities as well as challenges of issuing central bank digital currencies including by considering concrete steps to this effect.’
Meanwhile, the draft is expected to be discussed by EU finance ministers later this week with the potential for adoption next month. The ECB and other EU central banks could usefully explore the opportunities as well as the challenges of issuing central bank digital currencies. The published report also quotes an ECB official who said that, in its most ambitious version, the project could allow consumers to use electronic cash, which would be directly deposited at the ECB, without need for bank accounts, financial intermediaries or clearing counterparties.
In its current form, the document, prepared by the Finnish EU presidency and subject to possible amendments, would escalate an EU regulatory campaign against cryptocurrencies, which have so far been only partly regulated in some EU states, according to the report. The document could be adopted by EU finance ministers in December, it added.
If the draft in its current form is approved, which could happen as early as next month, it could have far-reaching consequences. More precisely, Reuters suggests that such a law could escalate into an EU regulatory campaign against cryptocurrencies.