The Banco Central do Brasil president reportedly said that Facebook Inc messaging service WhatsApp would be allowed to launch its new payments service in the country, but called for proof it can operate safely in terms of data protection in a competitive market. “We are not saying that it is not competitive, we just want them to ask for authorization and to show us how it will work for us to make sure it is competitive.”
What’s Next for CBDCs?
Fed Chair Jerome Powell recently dismissed the idea of private sector involvement in the development of a CBDC, but other current and former senior officials, such as Brian Brooks (Acting Comptroller of the Currency) and Christopher Giancarlo (former CFTC Chairman) disagree. Will we see the Federal Reserve launch a CBDC wholly on its own? Or will we see a few different Fed-endorsed “digital dollars” piloted simultaneously, perhaps some issued by the Fed and others by private companies or banks? It may be worth exploring a hybrid licensing framework whereby the federal government sets out technical, regulatory, and oversight requirements for the private sector to issue competing “digital dollars,” while still preserving the benefits of a Fed-run “public option.”
Raúl Carrillo (202007) Banking on Surveillance: The Libra Black Paper
A key point of this paper is that, in the rush to respond to Facebook’s Libra, conceptualizing what the project is and what it has the power to do has taken a backseat to trying to fit into one box within the existing regulatory system. For a company as powerful as Facebook, it advocates stepping back separating these questions, because Facebook and Libra will do whatever they can get away with. A two-pronged approach is recommended that focuses on Libra’s privacy violations as much as its potential to threaten financial stability, and makes specific regulatory recommendations forU.S. regulators.
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