Facebook has faced severely unexpected backlash and opposition from governments and authorities around the world ever since it launched its Libra project’s white paper in June. Some prominent American politicians have alleged that the Facebook stablecoin has the potential to become more dangerous than 9/11.
In Europe, the story is not much different. Lawmakers led by the French and German finance ministers warn that they are very doubtful about this project. The main issue with Libra is the fact that a private company has developed a currency that is designed to rival major world currencies like the pound and the dollar.
The naysayers and critics fear that if the project is launched, it would undermine and tumble national sovereignty and economic stability. Others wonder where the social network can properly hold or be trusted with such responsibilities. They are worried due to how the company has encountered many scandals in the past.
However, there is one thing that not many can deny: the shift to the cryptocurrencies and other digital assets is now truly underway. For instance, the People’s Bank of China is reportedly researching extensively about this new technology. The bank is even developing a financial asset that it can call its own to rival Facebook’s Libra.
Even though the officials in Beijing has stated that that its crypto project has no definitive timetable, speculation has come up that China want to beat Facebook’s Libra to launch. That notion has led most commentators to say that the resistance to Libra may result in a Yuan-backed asset.
That asset will enable China to gain dominance in the emerging economies. Some of the politicians are now urging the US to lead from the front in this technology wars. The head of Facebook’s Calibra wallet, David Marcus, is convinced that the project is not in jeopardy. His confidence comes in spite of the likes of MasterCard, PayPal, eBay, Visa, and Stripe leaving the Libra Association.
In that context, reports have suggested that Facebook might have potentially oversold the extent that the regulators were on board with the project. Nonetheless, what do central banks think of the stablecoins like Libra coming up? Also, could they play a major role in assisting them launch and thrive?
Hoping for Support
Currently, the most difficult hurdle that stands in the way of stablecoins like Libra is the unchartered and fragmented regulatory landscape. Even though some of the central banks seem to be entertaining such projects, analysts think that several fatal regulatory and legal issues will come up soon.
A good example is the governor of the Bank of England, Mark Carney. He is optimistic about Libra and has defended Facebook’s thought of creating a new globalcoin. He thinks that the social network was inspired to lead in this field due to the imperfections that exist in the traditional financial system.
Some of the disadvantages associated with the traditional financial systems are the high remittances costs that foreign workers must pay when sending money back home. Also, the cross-border payments are painfully slow. Nonetheless, Carney thinks that enough regulation levels coupled with oversight and accountability are necessary.
That said, he said that projects like Libra should not be allowed to launch until these protections are put in place. The Bank of England is seen to have gone some way to get the ball rolling. The UK’s central bank recently published a document. The document affirmed that Libra has the ability to become a systematically important payment system.
The document further encouraged the regulators and authorities to embrace the terms of engagement. That would, in turn, assist in supporting innovative platform before they are launched. Thus, there are promising noises from the UK on Libra. On the contrary, the European Union is not ready to embrace such stablecoins. This is the same trading bloc that Britain wants to leave by October 31, 2019.
France has been resoundingly resolute in its stance against Facebook’s project. In that context, Bruno Le Maire, the French Finance Minister, warned that Libra’s development cannot and should not be authorized on European soil.
These widely different opinions about virtual currencies and new technologies may be detrimental for the consumers, the economy, and for the entities trying to innovate. Cohesion, unity, and consistency will become the secret ingredients to ensure that stablecoins become compliant and rolled out of scale. Scale is vital due to how it helps minimize costs for the hard-pressed end users.
The most ideal way of moving forward and understanding all the nuances of the current issues is available. Regulators can consider the opinions of the brightest and best in the industry. Creating new connections and engaging in developmental debates about the perfect strategies is crucial. That will eliminate the hiccups that lie ahead will prove beneficial.
Organizers at the Crypto Finance Conference stated that they are striving relentlessly to achieve exactly that. That strategy will deliver an exclusive crypto finance and blockchain conference for investors. In turn, it will enable significant connections to be established. This event will take place in the Swiss resort of St. Moritz starting from January 15 to 17.
That event is scheduled to blend top-flight speakers with a lot of time to build new contacts and network extensively. Currently, the program continues to evolve as discussions on the critical role for the stablecoins in financial inclusion come up. Also, the agenda includes the evolution of central banks and tales from the frontline of global regulation.
With so many question marks coming up over the future of the ambitious projects like Libra, these are the kinds of events that can help secure some much-needed answers.