The Fed chairman’s attitude is a big turn: Will Libra die before the regulatory siege?

Facebook, the US social networking giant, previously released the Libra (Libra) white paper on cryptocurrency projects. The voices of discussion and skepticism have been constant.

At first, the support from the currency circle and chain circle was huge, and with the support of seven large companies including Visa and Paypal, Libra was born with a golden spoon. Imagine, Libra has less than 20% of the trading volume of Visa cards, and the annual transaction processing volume exceeds 1 trillion US dollars. In addition, the characteristics of its stable currency make up for the shortage of cryptocurrencies such as Bitcoin. All circles are worshipping Libra. "Subversive experiments in blockchain boundaries." However, Libra has attracted the attention of the regulatory authorities in various countries. It is hotly debated from all walks of life – does Libra seek another monetary system? Will it impact the international monetary system? Should it be included in the central bank's regulatory framework? and many more.

Powell's 90-degree turn

This is not, Fed Chairman Powell also voiced. On the 10th local time, at the semi-annual hearing of the US Congress on monetary policy, Powell said in response to questions from Members that Facebook's Libra project is raising concerns about privacy, money laundering and financial stability. “The Libra project has caused serious concerns, and these issues should be resolved thoroughly and openly.” Powell also pointed out that a few months before Facebook released the Libra project, there were representatives and the Fed. The Fed is also forming a working group to study the issue of cryptocurrency and coordinate US regulators and other central banks to assess these concerns.

It is worth noting that Powell had previously made public statements and did not worry that the US central bank could not implement monetary policy because of cryptocurrency. “I believe that Facebook has had a fairly extensive discussion with global regulators, including of course.” Powell said that for the Libra project to move forward, the Fed will have high expectations from a safe and stable regulatory perspective. .

In such a short period of time, Powell's attitude toward Libra turned sharply, and the regulatory pressures in other countries have also increased. The French central bank governor Villerouva said that France will set up a G7 working group under the leadership of ECB board member Benoit Coeure, responsible for the "stabilizing coins" project, including the Libra cryptocurrency in Facebook's plan. Bank of England Governor Carney said that Libra has billions of potential customers based on Facebook, and this alone is enough to be called a hidden danger in the financial system. Once Libra loses its credit, it will be heavily sold, which will put a huge burden on the financial system.

Will Libra become a "speculative product"?

Due to the role of Bitcoin, cryptocurrency in China is often seen as an investment. Some investors are also eager to move, will Libra have investment value? Will it be reduced to "speculative products"?

A coin investor told the Securities Times and Venture Capital Exchange that “there is no difference between investing in Libra and foreign exchange investment. From the current white paper, Libra is a stable currency anchoring real assets, but it is worthy of attention. And the worry is that if there is a large influx of funds, the actual value and transaction price may be separated from each other, and Libra will also generate certain investment value.

However, David Marcus, the head of Facebook's cryptocurrency, made it clear that Libra's use is to pay and transfer money. People don't buy things with bit-price volatility, and they don't invest in Libra, which is stable in price. In fact, the birth of Libra is an anti-bitcoin mechanism.

The US Congress plans to hold a hearing on the Libra project next week. Investors and analysts are also waiting for the attitude of other regulators to determine how far Facebook's financial services can go.

Source: Securities Times

Securities Times reporter Wu Jiaming