Facebook seems to have stirred up a hornet’s nest. After the announcement, to start your own digital currency, is the theme the very top of the Agenda of the G7 Finance Ministers.
The planned Facebook-digital currency Libra sees strong against wind exposed – not least by government and regulatory authorities in their own country. The U.S. government is driving the concern that the Cryptocurrency for illegal activities such as money laundering, human trafficking, and the financing of terrorism could be in need of. This is a Title that is also brought against other, already existing crypto-currencies. US Treasury Secretary Steven Mnuchin said this was in regard to Libra “is in fact a national security problem”.
The Ministry of Finance have made Facebook as well as other providers of financial services clearly, you need to implement the same measures to fight against money laundering and financing of Terrorism, as other companies also. In this context, Facebook, with its Libra was far “far from”, to get from the authorities the green light.
Earlier, had already reported US Central Bank chief Jerome Powell to the word. He was in Libra concerns in terms of the users ‘ privacy, money laundering, the protection of consumers and the stability of the financial world. The comes into play due to the possible reach of Libra, because Facebook counts on its network of around 2.5 billion users.
Libra – a danger for the banks? (pictured: financial district in Singapore)
“Destabilizing Effect”
Although the Plan is to put Libra as a so-called stable coin in the world. So that means that the digital currency is linked to ‘real’ currencies such as the Euro and the Dollar, and 1:is replaced 1 against this. So that every Libra is covered by real-world currencies in”. However, it is conceivable that this can not be obtained for the stability contribution at the end of a 100-percent coverage long.
“The aspect of the creation of money is the destabilising effect,” said Hendrik Leber, Fund Manager at asset Manager Acatis. “Today, the Libra is planned with a one-hundred-percent requirement, but it is only logical that I say at some point, I’ll go back to 50 per cent backing. And then I suddenly got a powerful credit creation mechanism.”
Is reserved in the conventional money system today the banks: they can award credits, which are only covered a fraction of money reserves. In order for banks to create a de facto money. Even Donald Trump had tweeted last week that he thinks the publisher of crypto-currencies Bank licenses to be necessary; companies like Facebook, who want to go into banking, would have to throw banks in the banking regulation.
The theme of the G7 Finance Ministers
International finally, the topic is discussed on the highest political stage – the Finance Ministers of the G7 meeting starting on Wednesday in France. Here, too, the sceptics are likely to determine the conversations. The Bild newspaper quoted from a Letter from the Federal Ministry of Finance that the Federal government’s wool together with the Central Bank to check, “such as a establishment as a real Alternative to the national currency can be prevented”. In consultation with the ministries of Finance in France, the UK and the USA, the plans of Facebook to see all of the “quite critical”. After the announcement of Libra by Facebook, had expressed financial supervisors is critical. So Felix Hufeld, head of the German financial authority, Bafin, said recently: “We can’t all sit and watch the water. We will have to respond in some Form is appropriate.”
The great Shaking is likely to have used not only in the case of regulators and supervisors, but especially in the case of banks. “What I see is that all of the major Social Media providers such as Amazon, Alibaba, or Google as a Cryptocurrency will launch in the next few years – as a Basis for intensive customer relationship,” says Hendrik liver. “It makes you wonder: Where is there a Bank in the game?”
Nail in the coffin for the banks?
In fact, Facebook has been cited as an example in the case of publication of the Libra project is that people could send around the world with low fees money to each other, which allows for especially people in poorer regions access to the financial systems. So far, banks and other financial service providers have done such international remittances, and tidy fees collected. In addition, you should be able to with Libra, of course, also purchases on the Internet pay for. Transfers from one account to another, where the Bank was, so far as the Mediator is necessary and also the charges suffered, would be superfluous.
Also, German Bundesbank Board member Burkhardt Balz in an Interview with the exchanges, told a newspaper that he had at Libra more questions than answers. Libra was in the Position of a strong attacker and could displace other competitors or weaknesses. “We are interested in what it means for traditional payment systems or banks, if, in the future, more and more payments are processed beyond the usual channels. After all, banks and payment service providers in payment transactions have so far been quite satisfactory yields.”
With Libra in danger, should come as the currency and large-scale enforce. So Libra financial stability is apparently still in a different way to be relevant: As a potential nail in the coffin for struggling banks, whose Bankruptcy could in turn lead to chain reactions in the financial system.