Facebook, the US social giant, recently released a white paper on its project of the encrypted digital currency Libra. Is Facebook changing the way it pays? Or digitise the dollar hegemony? For a time, related topics become the focus of global attention.
According to Facebook’s vision, Libra is a stable currency, a super-sovereign digital currency that anchors the value of a basket of currencies for exchange. Facebook, through its white paper, says the current financial landscape is not so satisfactory, and wants to break the established pattern that 1.7 billion adults around the world still do not have access to the financial system and access to the financial services provided by traditional banks. Facebook has also expressed concern about the current high cost of financial transactions: remittance fees, wire transfer fees, overdraft fees and ATM fees. Against this backdrop, Libra’s mission is to build a simple, borderless currency and financial infrastructure that serves billions of people.
Facebook attracted a lot of attention when it posted libra, its cryptocurrency. Facebook’s cryptocurrency is now talked about as if its vision had been realised or is certain to be realised, assuming that its 2.7 billion users will naturally become Libra’s users. However, the conditions for its realization, the existing problems and the competition it faces cannot be ignored.
In popular terms, Zuckerberg’s Libra coin is not the same type as a non-mainstream digital currency, nor is it a mainstream currency like Bitcoin. Instead, it tends to be a stable currency in Usdt (global digital currency trading intermediary, I Usdt – US$1).
TIE, a cryptocurrency analyst, said Facebook’s Libra played a major role in driving bitcoin to $10,000.
Facebook’s vision is to make Libra an international currency, but this country-free vision is hard to achieve.
On the one hand, Libra, as an international currency, will be closely linked with the finance of all countries, which has to attract the attention of the supervision of all countries, and needs to explain to the central bank of all countries.
On the other hand, the issue of privacy has also had to attract the attention of countries. In Europe, Facebook needs to explain to the GDPR that in some countries governments are reluctant to even recognize bitcoin’s legal status.
In terms of national differences, if the privacy protection of Libra is emphasized, how to ensure reasonable supervision? Such a strong conflict, I’m afraid it is difficult to reconcile an ideal solution.
However, in terms of money, which credit is more stable when the “currency” issued by a business is the currency issued by the state? It’s a dollar, of course. What’s more, Libra is anchored in dollars.
In addition, it is difficult to guarantee the fairness of the companies that join the Libra super node, although Libra means “Libra”.
Now, though, Libra faces growing obstacles and regulatory pressure.
Speaking at the council on foreign relations in New York, fed chairman colin Powell said in a question-and-answer session that the agency was studying Facebook’s proposed Libra cryptocurrency carefully and would maintain high standards for consumer protection and regulation, according to media reports. Libra is new and will have high expectations, Powell stresses. Responding to a question about whether new technology could increase shadow banking risk, Mr Powell said this was both a challenge and a positive for the system as a whole.
According to media reports, Markus Ferber, a senior member of the European parliament, said in a statement that Facebook’s currency should be “highly alarming to regulators” and called on the European commission to work out a regulatory framework for virtual currencies.Mark Carney, governor of the bank of England, also said Libra should face the highest regulatory standards, with the bank of England working with global institutions including the G7, the bank of international settlements, the international monetary fund and the financial stability board to review compliance issues. In a letter released by French finance minister Bruno Le Maire and bank of France President Francois Villeroyde Galhau, the G7 working group will also consider how to ensure proper controls on whether cryptocurrencies known as Facebook Libra pose a potential money-laundering risk, as well as several central Banks and the international monetary fund.
Meanwhile, according to Reuters, the governor of the bank of France said in a magazine interview that Libra, which Facebook plans to launch globally, must comply with anti-money laundering rules and apply for a banking license if it wants to provide banking services.