ING Chief Economist: Libra Accelerating Central Banks' Crypto Plans

The chief economist of Dutch multinational banking and financial services giant ING says that Facebook's plan to launch a digital currency has put pressure on central banks to launch their own.

Cliffe proposed that central banks could move towards launching their own digital currencies within the next two to three years.

Central bank digital currencies pave the way for negative interest rates.

One major implication of such a move by central banks, Cliffe argued, would be the prospect of doing away with hard, physical currency such as coins and notes.

This, he claimed, would potentially allow central banks to move even further into negative territory with interest rates, thus opening up a whole range of new policy options.

Even without a potential digital currency, European Central Bank president Mario Draghi had hinted at such a move earlier this year - a suggestion that was hotly challenged by ING CEO Ralph Hamers.

"This might open up a range of other options for central banks to help support economic activity in the next downturn."

As reported, the Cabinet of Germany and Germany's central bank Deutsche Bundesbank are currently working together closely on issues related to central bank digital currencies.

In a major report released ahead of Facebook's revelations, the Bank of International Settlements indicated this January that 70% of global central banks were engaged in CBDC work, but that only two had concrete plans at the time to proceed to issuance.

The People's Bank of China may move to release its CBDC ahead of Facebook's Libra, official sources have indicated, although uncertainty remains as to an eventual launch date.