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Opinion | There’s a Lot We Still Don’t Know About Libra - The New York Times

Opinion | There’s a Lot We Still Don’t Know About Libra - The New York Times | The CYDigital Blog |
The fundamental problem is that, contrary to Facebook’s narrative, Libra is not simply a money transfer scheme. Once launched, Libra will spawn an entire ecosystem of financial services and service providers — authorized Libra dealers, brokers, asset managers, custodians, exchanges, digital identity providers, verifiers and so on — whose identities and qualifications we cannot yet anticipate. These entities may be controlled by Facebook or by other corporate members of Libra Association, operate across multiple financial and commercial markets and not be subject to appropriate supervision and oversight by financial regulators.

Furthermore, will the Libra Association provide some form of liquidity support for these dealers, much like the Federal Reserve does for regulated banks today? This relationship could transform Libra from a “stablecoin” into an elastic (and potentially volatile) currency. It is this type of direct access to the Federal Reserve system that both enables banks in the United States to engage in money-creation and subjects them to extensive government regulation, including legal restrictions on their ability to transact with affiliated entities. Yet none of these regulatory constraints would apply to Libra dealers.

In effect, Libra would become the epitome of a “shadow” banking system (a term commonly used to describe the complex network of financial markets and institutions that replicate banking activities outside the sphere of bank regulation). The Libra Association and its affiliated entities would function as a privately run central bank, with Mark Zuckerberg as the cryptocurrency-era’s version of Alan Greenspan. It is only when we appreciate this dynamic that it becomes clear how truly problematic Libra could be, and why we should take so seriously Facebook executives’ unwavering commitment to plow ahead with their project.
CYDigital/'s insight:

The pushback continues to be significant. Consider this for a second: what if FB were to solve all of their data privacy issues, and their election influence issues. Would they not be in a better position to gain support for Libra?


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Following PayPal, eBay, Stripe, Visa, and Mastercard Leave Libra

Following the departure of PayPal from Facebook’s Libra project—a cryptocurrency that promises to “reinvent money” and “transform the global economy”—a new wave of departures has rocked the platform as eBay, Stripe, Visa, and Mastercard have all announced that they are abandoning ship.
CYDigital/'s curator insight, October 11, 2019 8:51 PM

We are not surprised.