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Libra, the digital currency announced by Facebook a month ago, is being questioned by many regulatory authorities and crypto-related experts. One of these individuals is Gita Gopinath, a chief economist at the International Monetary Fund (IMF) said that regulators should pay attention to this virtual currency.
IMF Economist Warns About Libra’s Risks
During a recent conversation with Reuters, IMF’s chief economist Gita Gopinath explained that it is important for regulators to pay attention to Libra and Facebook’s crypto project.
About it, Gopinath commented:
“It is very important for regulatory agencies in the world to pay close attention to these developments and to make sure that they are not too late in undertaking the right steps.”
During the last few days, Libra was attacked by many U.S. officials, including President Donald Trump and the secretary of the Treasury Steven Mnuchin, among others. These are not the first high-rank officials from a country to attack Facebook’s crypto initiative.
Just a few days ago, members of the U.S. House Financial Services Committee made several questions to David Marcus, the individual in charge of Facebook’s massive blockchain project. The main points marked by U.S. officials are users’ privacy and consumer protection.
One of the main risks related to libra is backdoor dollarization. There are many countries around the world in which it is not possible to have access to foreign currencies. At the same time, these countries tend to have economic and currency problems, making it much easier for Libra to expand.
Gopinath has also mentioned:
“If you look particularly at countries that are not reserve currency countries, would this lead to backdoor dollarization? All of these questions (and) whether there will be enough checks and balances in place to prevent money laundering … are very important.”
The virtual currency is expected to help individuals perform transactions in a fast and simple way. Facebook is just one of the eight founding members of the Libra Association that includes many large cap enterprises from all over the world. Some of these firms include Mercado Pago, Uber, Amazon and many others.
Regulators from other countries such as France, Italy, the United Kingdom, Singapore and Japan, among others, have also warned about Libra and how it could affect the whole crypto market and its stability.
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