According to the White Paper of the Diem (formerly Libra) stablecoin project, the project team is ready to enter into dialogue with central banks and provide the infrastructure for issuing government cryptocurrencies.
A Citi report titled The Future of Money says the Diem project could become a provider of government cryptocurrency issuance services for central banks. Diem could provide a layer of infrastructure on top of that provided by the public sector through the central bank’s digital currency, analysts noted.
Diem’s ​​White Paper states that the project is open to discussion with any central bank that would be interested in adding their currency as a stablecoin to the Diem network. This could provide more functionality and capabilities in the payments arena, thereby contributing to wider adoption of government cryptocurrencies by individuals and companies.
Diem is not the first project whose team has thought about providing infrastructure for issuing government cryptocurrencies. In March, it became known that Ripple is testing a closed version of the blockchain that will provide central banks with a secure, controlled and flexible solution for issuing and managing government cryptocurrencies.
Last December, the Libra Association announced the rebranding of the Libra project to distance itself from Facebook’s original concept and gain the trust of regulators. The association was named Diem Association, and the stablecoin was renamed Diem. In addition, the developers announced that Diem will be pegged to the US dollar at a 1: 1 ratio.
It has been repeatedly stated in the past year that central banks’ interest in issuing digital currencies has been at least partly driven by concerns about the threat to the financial system from the Facebook-controlled stablecoin. Earlier this month, the Bank of Japan called for common rules for the issuance of government cryptocurrencies, and a working group was set up in the UK to issue government cryptocurrencies.
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