Facebook’s Libra Forces European Banks to Sit Up & Realize They Need to Evolve
According to a recent report by Reuters, commercial banks in Europe are said to be working on a system to help optimize their payment processing. According to the report, there has been support for real-time instant payment processing for customers for a while now, but only a small percentage of EU banks had complied with the initiative.
However, given the fact that Facebook is gearing up to launch its stablecoin, banks have chosen to step up and implement the payment processing system.
Go Hard or Go Home
Indeed, Facebook’s Libra would pose serious competition to the operations of commercial banks. The currency has pretty much had the entire crypto industry on its toes since its whitepaper was launched about a week ago. Numerous speculations have swirled around its operations, but one thing is for sure—banks would be affected by its adoption. The banks have woken up to the potential challenge that it poses and are now shaping up for what could be a battle for supremacy.
Per the Reuters report, Etienne Goosse, the Director General of the European Payments Council (EPC), pointed out the need for banks to evolve and optimize their operations, especially in the face of new-found competition from tech firms looking to begin providing financial services.
Goosse did acknowledge the fact that tech companies have the resources and influence to affect the way banks work significantly, and given the fact that more of these firms are turning their attention to financial services, banks need to act fast or lose their industry.
He pointed out that as at now, only about 60 percent of European banks have implemented the EPC’s instant payment standard. However, the standard is set to be sweepingly adopted by next year. He said:
“They come with a global solution, under a global brand offering many things that the consumers seem to find wonderful. […] So we have no time.”
Continent-wide coverage was the primary factor that was said to determine the ability of the standard to cover multiple borders, stressing the importance of member states and individual banks to work together.
Libra: Still a long way to go
As for Facebook, the company also has some work to do before the launch of Libra next year. The release of the whitepaper has driven regulators to ask questions, ranging from how the currency expects to maintain stability to the company’s measures to ensure customer privacy. The security of the asset has been a major sticking point, with many believing that Facebook’s history of information mismanagement makes it particularly prone to security breaches and misdemeanors with customers financial data.
A lot of countries have also expressed concern with the asset. Earlier today, the Managing Director of Singapore’s Central Bank reportedly acknowledged the currency’s concerns, while also saying that they will need a better understanding of how it works if they are to allow it in the country.
The United States Senate Banking Committee has already scheduled a hearing into the currency for July, and it is expected that the resolutions gotten from there will shape the future of the stablecoin, assuming that there is one.
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Jimmy Aki, Khareem Sudlow