A cautionary approach to Facebook’s Libra
What is Facebook’s Libra? Facebook’s Libra is a digital currency devised by Facebook, which is currently planned to launch in 2020 and is backed by 21 members, including Uber and Spotify. The goal is to extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets. On this front, it initially attracted a large amount of support from tech-giants and investors. However, expressions of concern on regulatory issues and financial stability have cast a shadow over Zuckerberg’s far-reaching vision.
What are the concerns? The Financial Stability Board, which represents all large financial centers in the world, has expressed its concerns about the regulatory issues that a global digital currency could have. Financial stability, consumer and investor protection, data privacy, money laundering, terrorist financing, fair competition, cybersecurity, and tax evasion are all at risk of being compromised.
For Libra, this has meant a very bumpy road with several obstacles erected by politicians, officials, and regulators. The risks of financial stability and money laundering are ones that delimit the downsides of Facebook’s utopian plan.
Will Libra progress? Facebook continued to host its inaugural Libra Association council meeting on October 14 and announced the initial members of the Libra association. However, it does seem that regulatory fears have fractured Facebook’s bold ambitions, with Paypal, Mastercard, eBay, Visa, Stripe, and Mercado Pago, all dropping out of the scheme. Dante Disparte, Libra’s deputy chairman, reported to the Finacial Times that “the regulatory piece carries the most uncertainty.” Clearly, a dent has been put in Facebook’s confidence.
