The use of technological tool to improve money and payment systems have been closely associated since the earliest days on society and civilization.
Nevertheless, technology is presently changing money and global payment platforms “to an extent and speed never before seen” according to a recent paper titled,” After Libra, Digital Yuan and COVID-19: Central Bank Digital Currencies and the New World of Money and Payment Systems.”
The Research work is part of the European Banking Institutes’ Working paper serious 65/2020.
The paper’s authors include Douglas W.Arner from the University of Hong Kong- Faculty of Law; Ross P. Buckley from the University of New South Wales (UNSW)- Faculty of Law; Dirk A Zetzsche from the Universite du Luxembourg- Faculty of Law, Economics and Finance; and Heinrich Heine from University of Dusseldorf- Center for Business and Corporate Law (CBC)
Key milestones highlighted in the paper the launch of the Bitcoin (BTC) in 2009, which birth “explosive” growth in the blockchain and distributed ledger technology (DLT)-based platforms.
The researcher also maintain that the announcement of the Facebook-led Libra payment project last year brought about the “ a fundamental rethinking of the potential impact of technology on our global monetary affairs”
They also suggested that the announcement of China’s central bank digital currency (CBDC) or the Digital Currency/ Electronic Payment (DCEP)system (also called digital Yuan) mark the first virtual currency to be launch by a leading world economy.
They said COVID-19 has lead to an exponential increase in the adoption of digital payment method “in ways never before seen”
“ While the thousand of Bitcoin[supporters] were… ignored, safely, by regulators, Facebook’s proposed Libra, a global Stablecoins, brought an immediate and potent response from regulars globally. This proposal by the private sector to move into the traditional[domain of sovereign nations]- the minting of currency- was always likely to provoke a roll-out-of sovereign digital currencies by central banks”
According to them, China is leading this way in the potential key area with its continues development of the digital yuan, an initiative which could bring about a “trigger a chain reaction of central bank currency issuance across the world”
The paper suggests less attention on introducing new forms of blockchain-based money at this critical time, but rather on “transforming [global] payment systems”
The paper’s authors argue:
“[Modern payment systems] is where the real benefits will lie both during the [COVID-19] crisis and beyond. Looking forward, neither the extreme private nor the public model is likely to prevail. Rather, we expect the reshaping of domestic money and payment systems to involve public central banks cooperating with (new and old )private entities which together will provide the potential to build better monetary and payment systems at the domestic and international level”
They suggest that this type of model, technology will, for the first time in history enable” merger of payment and monetary systems”
In a report recently published by CoinCodeCap, the controversial Facebook-led Libra project is the most active project in terms of developers activities.
Industry leaders have also argued that Libra serves a signal that Fintech firms like PayPal, Visa, and Booking.com have been hoping to leverage on Stablecoins as a fast-developing area in modern, open-source finance.