by Did67 » 17/06/19, 16:00
If I understand correctly, ultimately it is only a "Canada Dry" currency ???
Libra: In the long term, will Facebook's cryptocurrency be a challenge for central banks?
This digital currency, called Libra, will be based on reserves of secure assets. The major monetary institutes will monitor its development closely.
By Marie Charrel Posted today at 10:40 am, updated at 15:22 pm
Subscribers article
After invading our private lives, will Facebook attack the sovereignty of states by issuing its own currency? Because, at first glance, his currency project launched in mid-2020, the "libra", based on foreign exchange reserves, evokes the mistake of operating a central bank. "This global currency would sign the end of the nation states, already very vacillating," alarmed the liberal philosopher Gaspard Koenig, in a recent tribune. "If we add to this all other cryptocurrencies, like bitcoin, central banks will soon no longer be the only masters on board the monetary system," said economist Philippe Herlin, authors of several books on the topic.
Not that easy. Because, for the moment, the libra and the adjoining reservations, the first modalities of which were to be revealed on Tuesday, June 18, above all raise many questions. According to the information available, this Facebook currency will be based on blockchain technology, which allows encrypted and fast payments to be made online. Accessible on the social network, it will be managed by a foundation of the same name, based in Switzerland, of about twenty members, including Facebook, Uber and Visa. Reserves would be set up to stabilize the price, in order to avoid the hypervolatility from which other cryptocurrencies suffer, such as bitcoin. Will this be enough to counter a possible speculative attack? How will these reserves be managed? By which financial supervisor will they be regulated? All this is still very vague.
For the moment, one thing seems certain: each time a user buys libras with his euros, dollars or pesos, the equivalent amount will be invested in safe assets - probably State debts - placed in the reserves. "It is therefore not pure monetary creation, ex nihilo, like that of central banks, but rather a form of digitization of existing currencies," remarks Martin Della Chiesa, from the consulting firm Accuracy, a blockchain specialist. .
Very different from bitcoin
Facebook promises a stable currency: will its price be tied to that of a basket of major currencies, including the euro and the dollar, the most likely option? In this case, it would remain under the influence of the central banks controlling the currencies in the basket, including, presumably, the European Central Bank (ECB) and the Federal Reserve (Fed). They direct the money supply through interest rates, and act on the economy through various tools, such as the redemption of public debts. In this, the libra would be very different from bitcoin, ...
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