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Bank Of Japan’s Spiky Concerns Over Facebook’s Libra

The leading social media giant Facebook’s proposal to launch its native global crypto asset is repeatedly facing criticism, suspicion, and various apprehensions from the regulators around the globe. Recently, the Bank Of Japan (BOJ) has shown its concerns against the ubiquitous impact of Libra which indicated that the project can carry an enormous risk to the conventional financial system. The report was published by a Tokyo-based Asia-focused publication Nikkei Asian Review on July 3rd.

Allegedly, Libra according to its White Paper that launched on June 18, mentioned that the global cryptocurrency would be backed by the basket of unnamed fiat currencies and government securities. This is probably because the technology company wants to keep away the dominance of one single fiat currency of any country. Meaning, after launching Libra there won’t be any individual country who is having a dominance on its fiat currency and Libra would be the currency which can be transacted globally and with the same amount.

On this revelation, BOJ is quite scornful and has shown contempt because Libra is posing a threat to the whole financial system worldwide due to Facebook’s huge user base and strategic approach to empower the world with its one motto “Move fast and break the things.”

“Libra is completely different from other forms of digital payment and it would move money into an absolutely virtual world.” The unspecified BOJ official stated according to the report.

In fact, there are various critiques pointing on Facebook’s omnipresent influence over the worldwide population. The social media giant has already faced so many privacy policy concerns after the revelation by Cambridge Analytica Ltd (CA) over Facebook’s data breach scandal. According to the government representatives and opponents, Facebook is dominating the whole world and red flags have already lifted up against Libra project, whether it is privacy or regulation both are vulnerable and positions the project at great risk because it is new but a major financial network that can cause industrialized hacking.

Further, the report also outlined the comments of  Bank of Japan Gov. Haruhiko Kuroda- who proposes to “keep a careful watch” over the effects of cryptocurrencies and their dominance over the world towards the adoption as a means of payment and how the financial and payment system would move accordingly.

Moreover, the report also highlighted various other concerns like Libra funds would be called as Libra Reserve which the White Paper has labeled as a “collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks.” And, if “an account holder at a Japanese regional bank withdrew money and bought Libra, the bank would have no guarantee that the virtual coin’s operators would redeposit reserve funds with the institution. This likely would result in deposits flowing to the country’s already mighty megabanks: Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group.”

Reportedly, last week there is one more highlight has come through Randal Quarles, the chair of  Financial Stability Board of international monetary authorities, which the publication has mentioned: Quarles cited that  cryptocurrencies like Libra “warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation.”

Tags: Libra, Bank Of Japan (BOJ), Cryptocurrency, Facebook, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group.