Facebook’s libra may not be approved, but the chances of a different digital global currency being created are now higher, the president of a European think tank told CNBC this week.
The social media giant proposed plans for a cryptocurrency in June, but has since run into various regulatory roadblocks. CEO Mark Zuckerberg testified before the U.S. House Financial Services Committee on Wednesday, but lawmakers are still not satisfied.
Beatrice Weder di Mauro, president of the Centre for Economic Policy Research, said libra is unlikely to be given the green light.
“What libra has done is … it has shaken up the central banking community,” she said, because a private sector-backed, global digital currency has suddenly become real possibility.
“This is also why it’s probably not going to happen, because there is, you know, the regulators are right now saying we are not going to allow it,” she told CNBC’s Tanvir Gill on Thursday.
What makes libra “threatening” to central bankers is that it is billed as an international currency backed by a worldwide network and could be rolled out “very, very quickly,” she said.
But that doesn’t mean the world isn’t ready for something similar to libra, Weder di Mauro said.
“The probability of something like this happening, either from the private sector or because central banks actually get together and do something … is higher now,” she said. “Central banks would be able to, if they banded together, to issue a global currency themselves.”
That could be a step up from the way the present international monetary system works.
“You can actually show that an international monetary system with a global currency would have advantages over the one we have at present where there is a huge dominance of the dollar.”
– CNBC’s Lauren Feiner and Julia Boorstin contributed to this report.