Facebook’s native cryptocurrency “Libra” is making the headline for most of the media outlets due to the mixed industry responses and the upcoming impact of the global digital asset by the social media giant on the worldwide economies.
Facebook has introduced the white paper on June 18, for its impending cryptocurrency and the blockchain project “Libra” for various financial services, which is expected to be in the industry in a much economical and comfortable way by 2020. However, soon after its launch, the mixed remarks have started to float on social media channels.
Earlier, from the United States House, the Chair of House Financial Services Committee, Rep. Maxine Waters offered to halt the Libra project until the “Congress and regulators have the opportunity to examine these issues and take action accordingly.”
Facebook Coin News and Bitcoin (BTC)
The statement has ignited the policymakers from several other nations as well. Philip Lowe, the Governor of the Bank of Australia (RBA), also denunciated Libra project and stated that it’s mainstream adoption possess a high risk because there are various regulatory issues that need to be addressed and a solid business case is very crucial to accept it. In fact, Lowe called Bitcoin (BTC) and Libra not viable for Australia.
Further on, Anatoly Aksakov, the chairman of the Russian State Duma Committee on Financial Market stated that “Facebook’s cryptocurrency wouldn’t be legalized in Russia.” However, the country’s overseers have started to analyze the positive effects of initial coin offerings (ICOs’) and the adoption of separate legislation which is a part of Russia’s law on crowdfunding. Elvira Nabiullina, head of Russia’s central bank, also shown optimism towards launching Russia’s central bank digital currency (CBDC), which would reportedly take time to roll out in the country.
In amid where Bitcoin (BTC) is soaring high and trading at $10,912.29 with a market cap of $193 billion already gained 59.2% dominance, Facebook “Libra” before rolling out has started gaining attention by the customers and the lawmakers due to the network’s strong user base. Decision makers are in a state of awkwardness and uncertainty on whether to approve this new token or not.
BIS Economic Report 2019, Facebook Cryptocurrency Concern
BIS- The Bank for International Settlement which is responsible for promoting global monetary and financial stability through international central banks cooperation from 1930, in its latest annual economic report 2019, has shown concerns over the entry of major technology firms like Facebook, Amazon, Tencent, Alibaba and Alphabet into the financial services sector and their forthcoming consequences over the banking sector.
Cryptocurrency is a major concern for the policymakers due to its rising adoption and Facebook’s Libra has played the role of a catalyst to reinforce this uneasiness among the regulators, possibly due to the power issues. In the recent report, BIS has indeed acknowledged the importance of big technology firms into financial sector for bringing the efficiency gains and extending the financial scope. However, the report also urges the industry regulators to take significant action in order to alleviate the impending, unfamiliar, and complex risks which are involved in the financial services landscape- notably competition and data privacy issues.
The reports state that the big technology giants are enjoying huge userbase and their accessibility towards the user database is also high due to their multifaceted business models and their economical services to them. Their inclusion in the financial services industry would pose a great threat to the banking sector because they are playing on the low-cost structure which consequently is highly scalable worldwide. Also, in terms of the promotion of any financial service, the platforms would be able to get the huge attention from the customers that can also be the reason to make the population redirect from the conventional financial route to the new technology-based services- such as payment system, money management services, insurance, and lending facilities which traditionally the banks are taking care off. This would have an impact on a large scale of people who are still underbanked but not naïve from these social media technology companies.
Facebook Libra Coin and BIS Report
BIS report directly mentioned Facebook’s name and relayed the apprehensions related to the conventional regulatory limits and the national borders. The international financial institution also demands from the authorities of national and international regulatory bodies- the verdicts and coordination amongst each other to maintain the right balance the public policy tools among prevailing banking sector and the major technology giants, so that everyone has an equal and fair chance of succeeding without hampering their business models.
Tags: Bank For International Settlements (BIS), Facebook, Libra, Amazon, Tencent, Alibaba, Alphabet, Banks, Financial Institutions, Technology Firms, Underbanked Population, Cryptocurrency, Libra White Paper, Maxine Waters,Elvira Nabiullina, Central Bank of Russia, Russian State Duma Committee on Financial Market, Anatoly Aksakov.