Libra: Facebook’s crypto currency calls on central bankers and regulators to act

Libra, the new crypto currency of the social media giant Facebook, will call the central banks on the plan…

It is currently a topic in all media, because it would also mean a small disruption for the financial world, especially in banking. FMN had already foreseen it. Libra, the new crypto currency of the social media giant Facebook, will call the central banks into action. The first crisis meetings were held promptly.

Libra: Facebooks plans for own crypto currency

The time is set for 2020. Facebook wants to launch its own crypto currency called Libra for its huge number of users, who now count well over one billion people every day. This will enable Facebook to enter the global payment traffic market. This crypto currency is intended to enable all users of the network to send money to each other and purchase goods from companies. For Facebook this is an enormous boost and for the industry an even greater shock.

First the Bank of England spoke: “The Bank of England, the Fed, all the major central banks and supervisors must control this social network project,” said the head of the Bank of England, Mark Carney, to BBC. Bundesbank boss Jens Weidmann also warned of the risks of such a cyber currency and considers a form of global regulation necessary. He stressed the dangers for consumers, especially how the value of stablecoins can be guaranteed. As a central banker, he is naturally also concerned with his own business: “The crypto currency could undermine banks’ deposit business and their business models,” said the central bank chairman.

The organized resistance

Suddenly it’s urgent. Last Friday, the Financial Action Task Force (FATF), a global body to combat and prevent money laundering and terrorist financing, wanted to present measures for stronger monitoring of crypto currencies. Currently, 35 countries are already members of this organization, which wants to regulate the 300 billion dollar area more strongly.

The group of the seven leading industrial nations has also set up a working group on the subject. It is chaired by ECB Director Benoît Cœuré, as France currently chairs the G7. The G7 finance ministers and central bank governors plan to meet in Chantilly on 17th of July. The USA itself is also called on to join the plan.

The Banking Committee of the US Senate has scheduled a hearing on 16th of July.

Mark Zuckerberg. Foto: Anthony Quintano from Honolulu, HI, United States – Mark Zuckerberg F8 2018 Keynote CC BY 2.0

Conclusion

The central banks and the entire banking system with its gigantic lobby will presumably do their utmost to defend themselves against Facebook’s offensive. The killer argument against Libra is once again likely to be the fight against money laundering and terrorist financing. Another reason, of course, is the importance of the money industry for Wall Street. In recent years, up to a quarter of profits have come from the revenues of the financial sector – the size of securities trading in the USA will be a challenge. The battle is underway.

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