News of Facebook’s Libra cryptocurrency was big enough that the Financial Times gave it special play, concluding that the “B2C fintechs are dead” in an article that examines how deeply “Facebook’s first big foray into the financial world” and new digital currency will affect traditional financial services.
“Banks were notably absent from the initial backers,” the Financial Times reported. Since then, traditional financial services have had their say, and the answers show fear.
Why? Matt Levin summed it up in his Money Stuff column, Facebook will Make Money Now, for Bloomberg:
Basically the point here is that if you replace the traditional social-regulatory technology of money creation with a new sort of computer technology of money creation, odds are that the power of money creation will end up not so much in the hands of free-spirited individual hackers around the world, but in the hands of some giant tech company.
In a July 4 post titled The Russian Response to Libra (paywall), Quartz Private Key summarized the ongoing responses, which included a call to Facebook from several members of the U.S. House to stop the development of the cryptocurrency. As Quartz reports :
Since Facebook unveiled Libra, a planned cryptocurrency initiative, two weeks ago, the company has been slammed by critics. From lawmakers and economists to financial regulators and consumer groups, virtually all are worried that Facebook’s crypto could impinge on privacy and facilitate financial crimes.
Implications for monetary policy and how the new cryptocurrency works—how it’s backed by a reserve and how it’s bought and sold—are explained by Larry White, a senior fellow at the Cato Institute, in Libra’s Unresolved Puzzles. (Thanks to Lyric Hughes Hale for the link.)
For a more ominous view, read about the “Libra con” and why it’s likely to succeed in The Spanish Prisioner, a post in the Epsilon Theory blog. “This is how a censorship-embracing coin replaces a censorship-resistant coin. This is how the State and the Oligarchy co-opt crypto. Not with the heel of a jackboot. But with the glamour of convenience and narrative.” (Thanks to Pascal Bouvier for the link.)