ING Chief Economist Believes Central Bank Cryptocurrencies Will Be Created Soon

The rapid advancements of Facebook's Libra stablecoin project development puts central banks on the verge of deciding whether or not to launch their own digital currency projects.

The chief economist Mark Cliffe predicted the future of Central Bank Digital Currencies (CBDCs) in a video, claiming that central banks "have to make a move towards digital currencies in the following two or three years."

According to Cliffe, the primary catalyst for central banks' actions is Facebook's timeframe – the social media giant plans to release their Libra stablecoin in 2020. Mark Zuckerberg himself closely monitors the stablecoin project, so Cliffe is confident about the project being a "turning point" in traditional banking. Policies, however, may not be updated fast enough to accept and regulate such projects.

"The policy community is already sensing the pressure and urgency," Cliffe noted in his video.

The Chinese government is leading the pack of institutions, wanting to release their own digital currency as soon as possible. PBoC's digital currency project aims to serve as a replacement for cash in circulation, but the bank's head Yi Gang did not clarify when exactly this is set to happen. Other countries, such as Turkey, are also preparing for an upcoming digital currency release. Turkey's central bank plans to issue such currency by 2023.

ING's chief economist believes that such a change would clear up a "whole range of possibilities for policy changes."

Another influential person amid the financial world, Yan Liu, told reporters that the IMF is interested in the development of digital currencies.

Liu, who is the Assistant General Counsel in legal cases at the IMF, also stated that the bank of central banks would provide technical assistance and policy advice to IMF member countries. The list of countries that are active in digital currency research includes Australia, China, Brazil, the Philippines, and Denmark.

Cliffe concluded his statement with notes that any CBDC project would face the problem of consumer acceptance with the expected interest rates lowering.

"Interest rates are already low in some countries, and the situation puts stress on consumers in certain parts of Europe. Such a move, however, would act as a support mechanism for economic activity in times of economic downfall", Cliffe stated.