Cryptocurrencies: the war between governments and corporations is back
While cryptocurrencies were mainly an initiative starting from citizen groups, or small organizations, things are changing.
Facebook-supported Libra may well remain only a set of bright announcements and never see the light of the day. The initial group of backers announced in June 2019 included blue chip organizations such as Visa, MasterCard, PayPal, Stripe … In October, many of these names had already disappeared but the backers list still included Vodafone, Spotify, Uber and Lyft, Iliad, PayU, and some venture capital organizations. Now, as nothing has really been launched, Vodafone just announced they are stepping down as they prefer to concentrate their efforts on M-Pesa, the mobile money scheme that started from Kenya with Safaricom.
The Libra project, from its early announcements, faced the opposition of governments, central banks and more globally established institutions, which feared seeing money privatized and out of control, becoming a threat to sovereignty. Central bank policymakers had to realize that if they do not take any initiative in digital monies, someone else would step in.
Initiatives sparked from diverse central banks: Venezuela has set up the Petro, its official cryptocurrency pegged to the price of crude oil; Riksbank, the central bank of Sweden, announced an e-krona; the Bank of Russia said they were considering the possibility of issuing their own central bank digital currency, to be called the digital ruble; People's Bank of China (PBOC), the country’s central bank is said to be planning the launch of a state-backed cryptocurrency, the Digital Yuan, to be announced in 2020; the US Federal Reserve said they are working on the topic, etc. In November 2019, the ECB (European Central Bank) said it was exploring whether to develop a central bank digital currency (CBDC) as an alternative to cash.
Now, government-driven initiatives make a comeback with the project announced by the European Central Bank. The ECB will be joined by the Bank of Canada, the Bank of England, the Bank of Japan, Riksbank (the Central Bank of Sweden), the Swiss National Bank and the Bank for International Settlements (BIS) to create a digital currency. At first, these central banks only create a group to discuss experiences as they assess the opportunities for central bank digital currency (CBDC).
So, it this the comeback of public powers against private initiatives? The battle between Bitcoin, Ethereum, and other cryptocurrencies against giants such as Facebook-backed Libra and government-supported new projects will be exciting!