After Facebook announced the cryptocurrency Libra plan in June last year, it has received full attention, and yesterday at the World Economic Forum in Davos, Switzerland, many experts said that with the emergence of new technologies such as blockchain and digitalization, Libra seemed to evoke the development of future digital currencies. At the same time, digital currencies triggered changes in the global financial system, causing many governments to reconsider their attitudes towards global reserve currencies.
During a panel discussion at the World Economic Forum, Gita Gopinath, chief economist at the International Monetary Fund (IMF), argued that the emergence of Libra had caused the global government to reconsider the US dollar as an anchor currency. She pointed out that the introduction of blockchain technology is like paving the way for the digitalization of future currencies, but she still believes that the US dollar is still an attractive anchor currency. “Because the US dollar provides the best stability and security when things get worse in the economy, holding US dollars is a reasonable option.”
At the same meeting, Brazilian Economic Minister Paulo Guedes believes that in the future, there may be several currencies that can be used in different countries around the world. “If you consider the political and economic aspects, 20 to 30 years from now, there may only be five to six kinds of goods,” he said that this move is to avoid the dependence of the national currency on the anchored US dollar.
However, Gopinath believes that this situation is less likely to occur. “Unless there is a large war or large barriers are established everywhere,” the dollar can still maintain its strong position. Because it is easy for people to switch from paying in cash to using electronic payment platforms, but whether to switch from US dollars to RMB is another consideration.
As for the head of Libra, David Marcus pointed out in another panel discussion that the essence of digital currency is to bring innovation to cross-border transactions and solve the problem of no bank in many places around the world. He mentioned that the central bank’s digital currency can be divided into two levels: retail and wholesale. The central bank directly issues digital currency to the bank at the wholesale level, but this has not solved any problems. “At most, it may improve efficiency. The European Central Bank is also quite practical.”
However, the entire concept of Libra is not designed according to the current model, but hopes to bring together a hundred homes to provide banking services to 1.7 billion people worldwide. For example, Marcus said that expensive long-distance telephone services are being replaced by communication software on the Internet, but this situation has not yet emerged in the context of money. There is no convenient, cheap and efficient way to use digital currencies in different places.