A recent report indicates that there is no hope for Facebook Libra in Australia. According to the report, the Reserve Bank of Australia says it does not any see any justification for making huge regulatory adjustments to accommodate Facebook Libra.
Various central banks around the world have been wondering how Facebook Libra could be regulated. Many have expressed concerns about its impact on their monetary policies. Meanwhile, Facebook Libra has been engaged in a global charm offensive to try to convince regulators to accept it.
However, in a recent submission to the Australian Senate, the Australian central bank said that Facebook Libra should not be allowed in the nation without strict regulation. The bank then noted that the demand for the currency was not clear even with the strict regulation.
In its submission, the central bank noted that there was already a low cost and efficient real-time payment infrastructure in place, pointing to the New Payments Platform. The bank also noted that when it came to cross-border payments various players had stepped in the recent past and it was now cheaper and more efficient to make cross border payments.
Central Bank Digital Currencies
In its submission, the Reserve Bank of Australia noted that digital currencies like Libra had led to a discussion about central bank digital currencies. The central bank said that there was no need to launch a centralized digital currency since it could negatively affect commercial banks operating in the nation.
The bank noted that there was currently little demand for such a digital currency. However, it said that if demand for a CBDC grew, it would lead to a fall in deposits in commercial banks and reduce the funds available for lending to households. This submission by the central bank shows the hurdles that Facebook Libra will need to overcome before it can gain global acceptance.
Global Efforts to Regulate Libra
The Financial Stability Board, which is a global body that regulates the financial sector, is expected to produce a report in 2021 on Facebook Libra for the G20. Meanwhile, the G7 has found that while Libra could help to enable quick and secure cross-border payments, there were still legal uncertainties that needed to be addressed. It also noted that issues such as taxation, the risk of money laundering, investor protection, and data privacy, needed to be dealt with soon.
Most financial experts expect that the biggest impact of Facebook Libra will be in emerging economies where demand for stable coins and efficient money transfer platforms was in great demand. The central bank of Australia noted that while digital currencies had the potential to impact its mandate, it was looking into the possibility of issuing a centralized digital currency.
Will Not Allow Libra
According to the bank, Facebook and its partners could leverage their large user base to launch the Facebook Libra coin. However, no matter what happens, Libra would not be allowed in the nation, according to the bank.