Libra, the digital currency that will run in a blockchain led by Facebook, was announced with huge repercussion. Like it or not, the fact is that considering Facebook’s own size and the announced partners, the impacts of Libra in the financial system will be enourmous. The main change should occur in the international financial system. Commercial and central banks are concerned with the creation of the currency. On the other hand, politicians are very wary, especially with regard to local currencies.
To the blockchain specialist Eloísa Marchesoni, as it will transactions, the Libra will have the potential to be a global currency and completely change the international financial system. Banks may initially lose market in payments. In addition, local currencies very volatile can completely lose importance. On the other hand, the Libra may accumulate Government bonds, becoming one of the largest creditors of some countries.
Still regarding the impacts of the new currency in the financial system, the Libra payment protocol can turn banks irrelevant, both central as commercials, according to the CEO of the derivatives giant BitMEX. For him, even if the Libra is a centralized platform that can freeze transactions and specific users, banks still face big turnarounds.
Politicians fear impacts of the Libra in their financial systems
It’s a law of Physics: for every action there is always be an equal and opposite reaction. And in this case, the reaction comes from the politicians. After the announcement of the Libra, several countries began to move. China has already signaled that it intends to create a digital currency itself, in response to the Libra. In Germany, some politicians want the creation of a digital euro. The United States asked Facebook to put Libra plans on hold awaiting results of investigations.
Still in the US, the Fed Chairman, the Central Bank of the country, Jerome Powell, said that Libra raises “serious concerns” that deserve a profound regulatory review.
“The Libra raises serious concerns with respect to privacy, money laundering, consumer protection and financial stability,” he said in a testimony before the Financial Services Committee of the House of Representatives.
France, in turn, will create a G-7 task force (Group of the richest countries in the world) to study how central banks will ensure that cryptocurrencies, such as Libra from Facebook, will be governed by laws ranging from money laundering to the consumer protection rules.
The banks from the Euro region are planning to join the payments system in real time until the end of 2020, for fear of the future cryptocurrency of Facebook. The region of 19 countries woud already have real-time payments system since 2017, but only half of the region’s banks had actually joined. After the announcement of Facebook’s Libra, the banks are now banks feeling the heat of competition.
Libra is born with immense potential for daily use
As Libra is being launched with partners like Visa, Mastercard, PayPal, Uber, Booking.com, Spotify and Vodafone, the future Facebook currency presents a huge potential to have a mass adoption for payments on a daily basis. Besides, it is foreseen 100 additional partners when the currency comes into operation.
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