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Does Fecebook’s Libra pose any real threat to economy?

The correct answer is ‘No’. Libra threatens banks as well as VISA and MasterCard.

Actually, there is nothing wrong with Libra. This ‘stablecoin’ is just a fictious digital surrogate for money. Facebook aims to replace traditional or ‘fiat’ currencies like dollar, euro, yen, etc. with Libras in it’s own worldwide digital payment ecosystem. A Facebook user, even unbanked will buy some Libras for his or her fiat currency first and then spend Libras from a digital wallet virtually everywhere without a necessity to think about ugly currency conversions.

The idea itself is not breathtaking but there is a string attached. Libra has been introduced by the largest social network in the world with 2.5 bn active monthly users on board. This huge customer base definitely guarantees Libra a 100% chance of success.

Facebook’s Libra might improve existing economy by introducing a universal low-cost worldwide payment system and involving unbanked into cashless payments. There is only one serious drawback of Libra. Facebook pretends to become world #1 SuperMegaBank. This is definitely puts traditional banking in jeopardy. No banks including central banks exist in Facebook’s Libra future. Moreover, VISA and MasterCard should disappear as the card payment systems are heavily dependent on banks: no bank customers means no cardholders.

I do believe that this is the only true reason why financial authorities try to prevent Facebook from rollout of Libra. Possible boost of ‘parallel economy’ expected by financial authorities after launch of Facebook’s pseudo currency is a lame excuse.

#Libra #Facebook #stablecoin

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Maxim Kazakov

Maxim Kazakov

CEO

Open Transaction Systems

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17 Feb

Location

Moscow

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This post is from a series of posts in the group:

Fintech

Fintech discussions and conversations around the development of fintech.


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