Facebook's Libra 🔗

There was a lot of concern from regulators when Facebook announced Libra but it looks like they’re pushing ahead -

I’m pretty skeptical about blockchain generally, as we’ve billions poured into ICOs but very little in terms of blockchain powered solutions reaching scale. If anyone can do it then Facebook, with their massive audience, should be a good bet, right?

While I’m on the subject, there was a lot of debate about Libra at a Finimize event that I went to last night. They’re claiming that they’re building a service for the unbanked but obviously the ‘banked’ generally have more money to spend so I suspect they might just be claiming that in order to satisfy the regulators. It looks like the Alphaville team’s skeptical too.

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French finance minister Bruno Le Maire said on Thursday that France refuses to support the development of Facebook’s Libra cryptocurrency in Europe because it puts the monetary sovereignty of states “in danger,” could result in systemic risks, and undermines the fight against financing terrorism.

Those are some pretty significant concerns.

France says it will not support Libra’s development in Europe - FT

I am highly sceptical to say at least about Libra. A digital currency that sits parallel to currencies issued by governments, but is not held back by the same constraints and potentially tax implications is a worry in one right.

It then being governed by a consortium of American private companies, led by Facebook, seems a rather nightmarish scenario to me. FB can’t even govern their own platform, nor protect the data that sits on it, let alone act as a neutral enforcer of currency.

I don’t trust them with my data, let alone with my money. That is not to say that the concept of Libra is wrong per se, I do believe a global digital currency has enormous merit, but for heavens sake let it be governed by a neutral body like the IMF or UN.

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I totally agree, it’ll be very interesting to see Christine Lagarde’s influence on this, when she becomes head of the European Central Bank because she’s made some favourable comments about governments issuing digital currencies in the past -

“The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi-anonymous… And central banks would retain a sure footing in payments.”

Ms Lagarde said central banks in Canada, China, Sweden and Uruguay were all “seriously considering” digital currency proposals.

She added that while the case for digital currency “is not universal” it should be investigated “seriously, carefully and creatively”.

There we go, against Libra but open to a public digital currency -

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Despite the alarm from several countries, Facebook’s pushing ahead -

Undeterred, Facebook to press on with Libra launch next year (exec) - Yahoo Finance

but to be fair, this was said to a Swiss newspaper and the Swiss regulator has said that they’re willing to consider allowing Libra so perhaps they mean that they’ll start there and see how it goes.

If they press ahead against warnings of countries, then good luck to them. They’ll end up shooting them selves in the foot and the countries will either slam them down or penalise them in other ways, for example through crazy taxations.

Facebook has proven to be a totally incompetent warden of customers’ data, I think they have burnt all the good will that was left with most governments, even more so given the current tax situations

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I completely agree with @Marsares, they have proven they can’t be trusted with customer data and they put profit over people.

The idea of a mega corporation creating a new currency which replicates and is backed your nations currency (and others) and pushing it as the defacto way to exchange money sounds horrible.

In China they have done a brilliant job converting people over into a digital currency and digital wallets via WeChat, but that is government backed and designed for the market. Having a company (based in the US and following their laws) having influence over other nations currencies will be a hard no in my mind.

I’m not sure how they plan to create a stable coin which follows multiple currencies (to remove FX fluctuations when using their coin) without ultimately influencing the market. Potentially this could create new arbitrage opportunities for FX traders.

Feels like too many unknowns, too much control, and a “just get it done” attitude. It’ll be interesting to see which countries allow Facebook to go ahead and the impact it has.

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Well this has all got fun

Tim Apple isn’t a fan. But neither are PayPal now

Reassuring use of ‘first’ by the beeb

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Everything is fine :grimacing:

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I’m guessing the partners were to ensure Libra could function outside just Facebook’s ecosystem, as each of them pulls out the remaining partners don’t want to be the only ones better on Libra.

Though I doubt it’s going to slow down their ultimate goal of getting this stable coin out there.

Interesting/Good to see BoE setting out not so much rules but a soft reminder of what is to be expected but ultimately welcoming innovation.

If nothing else this is proving to be an excellent test to see which regulations can handle one of the major tech firms making the leap into finance (as many have feared they would.)

It’s also creating some added volatility for the other cryto currencies too, good if you are into that kind of thing I guess!

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Nice write up on TechCrunch about who is left and why the ones who have parted ways will cause serious distribution issues.

Who remains with Libra (from the same article)

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This makes a lot more sense for them to get started and reduce the stress this is creating for them with regulators.

Rather than just use Libra for everything, you would have Libra pound, Libra euro etc.

Not as clean as Facebook would have liked but it would speed everything up in terms of getting this out there. They can also handle the transfer value between Libra Pound and Libra Dollar if they wanted and thus undercut FX transfer fees. Interesting how this will work in practice if they do go down this route.

Will this be too big a compromise or is it the only way to get this moving and into mainstream use. Whatever happens it’s a massive step forward for digital currencies in general.

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Still slightly concerning though as there’s a lack of credible stablecoins at the moment. This is hard to get right.

Also..

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Good to see the EU considering proactive solutions, rather than simply trying to deal with the ‘threat’ of Libra by banning it.

So having scrapped payments in Messenger midway through last year, Facebook’s now launching a new service for payments, using the traditional infrastructure. This doesn’t exactly make them look committed to Libra.

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My guess is this is messenger pay 2.0.

Now it’s across all of their brands, one payment solution which is hooked into all their outlets. Better for adoption and making sure everyone is completely integrated.

Once you are using Facebook pay (sorry, FACEBOOK Pay) it’s a much smaller step for Libra to be integrated and for you to start using it without thinking.

In a situation where you become adjusted to using this payment solution, and suddenly one day your default isn’t your card, it’s a digital currency with added benefits like no FX, and they don’t charge any fees, and both parties get the money sooner etc., the barrier to giving it a go is much lower. If it’s the same amount of taps and only gives you upside you probably won’t think twice about this new solution, it looks and feels the same to you in the moment, it’s just Facebook changing how you send the money.

Very smart move by Facebook in my mind. Firstly they are reentering the payment solution space, they are increasing the integration across their brands making them harder to separate and easier to blend into one “thing”, and it gives them a platform to roll out Libra when the time is right.

Libra doesn’t stop Facebook pay and Facebook pay won’t impact Libra’s progress in being created and approved. However, once Libra is ready Facebook will have a way to distribute and encourage adoption across all of their brands simultaneously. No more worrying about when each individual brand is ready, they all use one service which is the master for all things finance related.

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Don’t forget, you need to shout it when you’re typing it as well.

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Looks like the EU is trying to restrict the rise of cross currency stablecoins until they understand the impact and come up with some common ground rules.

The UK has a better approach in my own opinion, however they do get criticised for not acting fast enough and waiting to see what happens for too long.

I guess the only real impact to Facebook will be they don’t launch in the EU and focus on other markets first.

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My guess is that Facebook will design Libra so that it doesn’t meet the criteria of a stablecoin to get around this. Unless they haven’t defined that yet, in which case they’re really stuck.

But I expect the regulators will have less concerns about a fiat backed coin vs something fully digital, as it’d have less of an impact on fiat currencies and their monetary policy as a result. So perhaps that’s the compromise - which Facebook’s already said they’ll make.

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