Libra Crypto Is 'Undoubtedly' a Wakeup Call for Central Banks, Says ECB Exec

Facebook's Libra could potentially solve some of the problems in the international payments market, but it might create a number of others that will require creative thinking by the regulators, says an European central banker.

In comments to the German federal parliament Bundestag on Wednesday, Benoit Coeure, a member of the Executive Board of the European Central Bank, said "Libra has undoubtedly been a wakeup call for central banks and policymaker," and "Policymakers and central banks should respond to these challenges."

He added that stablecoins, in particular Facebook's Libra cryptocurrency, could help connect the 1.7 billion people globally who are now off the financial grid while at the same time making cross-border payments cheaper, faster and more transparent.

In improving access and facilitating cross-border retail payments, they could address two key deficiencies in the current architecture of the market.

Libra, which is being supported by a consortium led by Facebook, will be connected to a huge existing user base, giving it a "Truly global footprint," according to Coeure, who chairs the Committee on Payments and Market Infrastructures at the Bank for International Settlements.

He is also the head of the Group of Seven Committee on stablecoins.

The central banker raises a number of concerns about stablecoins.

"There may be the risk of the monetary sovereignty of countries being infringed," he was quoted as saying in written summary of his comments, which was published by the Bank of International Settlements.

In the comments, he said that the G7 group on stablecoins would be offering its recommendations in time for the IMF-World Bank meeting, which runs Oct. 14-20.

His comments come as Libra faces hostility from some quarters, especially in Europe and China, but are in line with previous statements by the central banker, indicating that a consensus is developing around a balanced approach of welcoming but tightly supervising the stablecoin.