Digital Euro Association Blog

A Global Digital Currency to rule them all? A Monetary-financial View of the Facebook's Libra for the Euro Area

Jan 12, 2021 7:47:41 PM / by David Tercero-Lucas

In this paper, the monetary-financial implications of two versions of Libra are analysed, i.e. Libra 1.0 and Libra 2.0. First, I briefly discuss how technological developments in monetary history have reshaped the payments landscape and how Libra is going to challenge the current bank-based ecosystem. Second, I identify some risks stemming from the current monetary-financial system and I review the Euro Area's regulatory framework to control these risks. Third, I assess how a wide acceptability of Libra's 1.0 and 2.0 could challenge the current monetary-financial structure and therefore the risks associated. Finally, I propose a Synthetic CBDC issuance, i.e., a narrow banking approach, to limit the new risk associated with the introduction of Libra 2.0.

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David Tercero-Lucas

Written by David Tercero-Lucas