Facebook-Led Diem Could Become White-Label CBDC Provider: Citi Report

Diem could become a white label central bank digital currency (CBDC) provider, according to Citi’s “Future of Money” report, published Thursday.

• The stablecoin project could provide an infrastructure layer on top of that provided by the public sector via CBDCs, the report suggested.
• The Diem white paperhttps://www.diem.com/en-us/white-paper/ made it clear that it is "open to having a discussion with any central bank [that] would be interested in adding [its] currency as a stablecoin on [Diem's] network,” according to Citi.
• This could provide greater functionality and features in the payments sphere, thus driving greater adoption of CBDCs by individuals and companies.
• Diem would not be alone in seeking adoption as part of a CBDC ecosystem. Ripple published a new white paper in March pitching XRP as a “neutral bridge” between different currencies in order to improve cross-border payments.
• The much-maligned Diem project has experienced intense scrutiny since it was announced by Facebook under the name Libra in 2019. Its name was changed to Diem last year in an attempt to distance itself from this association.
• The backlash saw a number of the project's founding partners pull out, including PayPal, Visa, Mastercard, Stripe and Vodafone.
• It has been argued that interest among central banks to launching digital currencies was at least partly triggered by their consternation over the threat to the financial system posed by a stablecoin operated by Facebook.

Read more: Bank of England and HM Treasury Launch Taskforce for UK CBDC