Libra Association Exec Claims Libra Will Not Replace Existing Money
Libra Association Managing Director Bertrand Perez said on Friday that the Facebook’s cryptocurrency Libra, that should be launched by a Geneva-based association next year, is not intended to replace existing currencies. He said:
“We are not in the area of implementing any monetary policy with the (Libra) Reserve.”
This confirms what Libra’s CEO David Marcus was speaking back in July at the hearings when he kept stressing that Libra is not an investment and it doesn’t want to conquer the dollar.
Speaking at a blockchain conference hosted at United Nation headquarters in Geneva, Perez tried to explain that this project could help reach many U.N. sustainable development goals, such as eliminating poverty and reaching gender equality.
On the conference were present also speakers from the Swiss National Bank and International Monetary Fund so it’s for us to wait and see what they have to say now. At the beginning of this month, Thomas Jordan, chairman of SNB’s governing board said he is afraid that digital currencies like Facebook’s Libra might obstruct the central bank’s possibility to institute and implement monetary policy.
What he then proposed was Libra being pegged to the Swiss franc saying it “would pose fewer risks”. He then explained:
“As long as prices, wages and loans are set in Swiss francs, the SNB can influence incentives for savers and borrowers via its monetary policy and thus ensure price stability over the medium term. However, if stablecoins pegged to foreign currencies were to establish themselves in Switzerland, the effectiveness of our monetary policy could be impaired.”
Since Libra basket was recently revealed, and there is no Swiss Franc for now, it will be interesting to see Swiss bank reaction.
IMF Not Fond of Libra
In July this year, International Monetary Fund acting Managing Director David Lipton said that its risks include “the potential emergence of new monopolies, with implications for how personal data is monetized; the impact on weaker currencies and the expansion of dollarization; the opportunities for illicit activities; threats to financial stability; and the challenges of corporates issuing and thus earning large sums of money -previously the realm of central banks. So, regulators and the IMF – will need to step up.”
Still, there seem to be some positive moves towards Libra acceptance – small but still there. A few days ago, we reported of ECB Board Member Benoit Coeure who presented some pretty positive attitude saying that Libra has been a wakeup call for central banks and policymaker, and that they should respond to these challenges.
He commented that stablecoins, especially Libra, could help connect the 1.7 billion people in the world who are now “off the financial grid”, confirming Marcus’s statements before – that Libra is created to help unbanked.
Also, Coinbase’s CEO Brian Armstrong showed pretty unexpected support calling Libra “one of several important crypto projects on the horizon with the potential to improve the world. Whether it works or not still remains to be seen, but I find the backlash to it a bit odd and misguided.”
In the last news, Marcus Treacher, Ripple’s Senior Vice President of customer success, said that a big problem with the social network’s Libra project is that it’s a “walled garden” — in other words, a closed system.
The term has in the past been applied to tech companies like Facebook and Apple in relation to the control they have over their software and apps.
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