Fear of Facebook spurs calls for Fed to build rival digital currency
By Zachary Warmbrodt
U.S. policymakers are so concerned about Facebook’s plans to launch a new digital currency that they’re contemplating a novel response — having the Federal Reserve create a competitor. Inside and outside the Fed, what was once considered outlandish — the idea of a U.S. government-run virtual currency that would replace physical cash — is increasingly attracting attention. That’s thanks in large part to Facebook’s planned Libra cryptocurrency, a global payments network that lawmakers and regulators around the world see as a threat to the financial system’s order. “Libra bust this way out into the open,” said Karen Petrou, a managing partner at Federal Financial Analytics who advises executives on coming policy shifts. But it’s not just Facebook. The discussions are also taking on urgency as other countries consider creating their own digital currencies — another potential challenge to the primacy of the U.S. dollar. The head of the Bank of England has floated the idea that central banks could create a network of digital currencies to replace the dollar as the world’s reserve currency.