On Tuesday Facebook declared Libra, a cryptocurrency it will start (along with 27 other partners) in 2020. Libra’s coming feels like a major moment for a notion that’s been around for a decade but is still struggling to become mainstream.
Bitcoin, for example, is a world-famous cryptocurrency almost nobody uses to do real economic work beyond consuming lots of electricity mining tokens then speculating emptily in their value.
Libra thinks it can address this by being more like a real fiat currency, handled by large brands (Visa, Mastercard, Spotify, PayPal, Uber, Lyft, Vodafone, and Facebook itself), backed by real assets, and regulated to prevent both volatility and the possibility of money laundering.
But unlike PayPal and Venmo, Libra is largely geared toward individuals without bank account.
Libra Already Facing Heat from Government Regulators
However, it didn’t even take 48 hours after Facebook announced its cryptocurrency strategy for the authorities to raise an eyebrow. House Financial Services Committee Chairwoman Maxine Waters called for Facebook to halt development, and now the Senate Committee on Banking, Housing and Urban Affairs has scheduled a hearing to insure both Libra/Calibra and privacy issues.
France’s Finance Minister Bruno Le Maire warned against Facebook’s crypto getting a”sovereign currency,” hours following Facebook’s announcement, even though a German politician called the company a”shadow lender ”
Meanwhile, the U.S. Senate Banking Committee recently called about the tech giant to join a hearing on its own aspirations to make virtual currency.
Now, several central bankers will also be weighing in on the debate.
“I think there is a great deal of water to flow under the bridge until Facebook’s suggestion becomes something which we’re using all of the time,” Reserve Bank of Australia Governor Philip Lowe stated at a press conference Thursday.
“There are a great deal of regulatory problems that need to be addressed, and they have got to create sure that there’s a good business case”
In response to concerns about regulation, Facebook previously said it looks forward to fixing policymakers’ questions regarding the cryptocurrency plans.