The European Central Bank (ECB) has not ruled out having “results next year” with regard to progress on the feasibility of a self-backed digital currency, according to French Finance Minister Bruno Le Maire. However, Le Maire was quick to remind blockchain enthusiasts that the project is “for the long term” and faces significant hurdles en route to any potential launch. The need for an ECB token has been ramped up this year given the pressures brought by China’s public adoption of blockchain technology and the aspirations of Facebook’s Libra token.
Libra a “Wake-up Call” to Governments
Speaking at a news conference in Brussels on Friday, Le Maire acknowledged it would take time and patience to work out an alternative to Facebook’s Libra platform, which he has publicly criticized ever since the whitepaper was published in June this year. ECB officials have already spoken of their early work on the technical aspects of a digital currency, with clarifications expected to be presented to European Union governments soon. Le Maire and other EU finance ministers discussed the issue of Libra and a euro-zone competitor at a meeting in Brussels last week, with a joint statement announcing the ECB’s work on the project anticipated at their next gathering in December. Libra has acted as a “wake-up” call to governments and financial overseers according to the EU’s finance commissioner Valdis Dombrovskis, stating that the concept of the project, and the emergence of blockchain technology in general, showed that there are gaps in the offer for fast and cheap cross-border payments in Europe.
Could ECB Render Banks Redundant?
Early discussions on the various routes open to the ECB have resulted in two key pathways. One is giving banks electronic cash or tokens which they can then distribute to their clients, although, while another relies on the creation of a new digital coin where with users able to open bank accounts directly at the ECB. The latter method would cut transaction costs dramatically, but it is more technically demanding and would make existing banks and payment services largely redundant. Whichever option the ECB plumps for in the end, the amount of technical and legal challenges that remain to be overcome could delay any potential launch until 2021 at the earliest.