- The president of the Deutsche Bundesbank und ECB official, Jens Weidmann calls for a cheaper and faster alternative to Facebook’s Libra.
- With its products Ripple could become a viable option for banks.
If the Facebook Libra project is not further delayed, the European Union could need an alternative to Libra, says Bundesbank President Jens Weidmann. The interview was published on 2 January 2020. The President of the Deutsche Bundesbank commented on the Stablecoin Libra and warned of the premature launch of a digital euro.
The representative of the German financial institution believes that projects like Libra should not be created. In return, he said, it is necessary to improve the technology that banks use for their transactions. In Weidmann’s opinion, however, the state should only participate to a limited extent in the development of new technologies:
I don’t believe in always calling for the state right away. In a market economy, it is first up to companies to develop a corresponding offer for customer requests.
According to Weidmann, he is also reluctant to look for a solution like the digital euro without first determining exactly what role it will play in the economy. On this point he differs from Christine Lagarde, the President of the European Central Bank.
Lagarde launched a working group on the digital euro in mid-December last year. The ECB President stressed the need to be proactive and responsive in the race for digital coins. Although the two representatives of the European financial institutions differ in their methods, they both agree on the need to act quickly. The digital race for a digital currency has strong competitors.
The digital yuan, China’s CBDC (Central Bank Digital Currency), will be one of them. The Asian giant is preparing for its test phase and could fundamentally change the ecosystem of cryptocurrencies and the functioning of the traditional financial system during 2020.
A quick and low-cost solution, Ripple’s opportunity
A plausible alternative for governments could be the products of Ripple, as a kind of middle ground between Lagardes and Weidmann’s vision. Ripple has more than 300 partners worldwide and has already demonstrated its capabilities in various applications.
Among the partners are Santander Bank and Shinhan Bank, one of the most important banks in South Korea. Ripple’s payment solutions are fast, cost-effective, secure and can move large sums of money across borders in seconds – everything the President of the Deutsche Bundesbank demands.
But the Facebook project is not dead yet. It recently announced that it has completed more than 51,000 transactions on its test network and published its roadmap for 2020. In a recent report by Ryan Selkis, he explains that the project can still be approved if its original design is changed.
Selkis suggests that Libra should be a range of stablecoins adapted to the needs of the markets of a particular country or region. Although Selkis does not seem optimistic that this change can be implemented. On the potential of Facebook’s Libra, Weidmann said:
Facebook has more than two billion potential users. This would give Libra the potential to become a dominant player right from the start.