There are more and more allies in the "going down", and the pressure of supervision is getting bigger and bigger. Libra has to consider changing the way. From the originally proposed plan linked to “a basket of currencies”, and now considering the equivalent of the legal currency equivalent to the US dollar, Libra seems to be trying to take a step back in exchange for regulatory release. After two days, Facebook CEO Zach Berg is going to "go to the meeting," and a storm of questioning is inevitable. I don't know if JPMorgan Chase CEO Jamie Dimon "Libra is a good idea, but it will never be realized" will not be a word.
According to Reuters, on the 20th local time, Facebook said it would consider linking its global digital cryptocurrency Libra to a single legal currency, replacing the originally proposed plan linked to several legal tenders. “We can take a different approach and create a series of stable currencies, such as the stable currency linked to the US dollar, the stable currency linked to the euro, and the stable currency linked to the pound, rather than the stability of the original design linked to a basket of currencies. Coin.” Libra project leader David Marcus said at a banking seminar.
However, Marcus also said that he is not suggesting that the stable currency linked to a single legal currency is a new priority for the group. According to him, they are concerned with completing the mission and there are many ways to do this. Libra needs to show more flexibility. “We can solve this problem with a lot of stable coins. These stable coins represent the currency of each country in a tokenized digital form.”
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In the original plan, Libra's ambition is far more than that. According to Libra's previously published white paper, Libra will anchor a basket of currencies of various legal currencies to control price volatility within a certain range. It is understood that the proportion of its basket of currencies is 50%, 18%, 14% and 11% and 7%. In addition, Libra will pay dividends to the holders, bringing the entire system closer to a bank.
However, the follow-up results have been seen all over the world, and the supervision of the interception and interception of Libra has repeatedly lingered on the edge of the dead. Recently, the BBC also reported that the G7 drafted a report on cryptocurrency recently, saying that cryptocurrencies such as Libra pose a risk to the global financial system, and Facebook should not promote Libra until it proves the security of its cryptocurrency. plan.
Prior to this, Fed Chairman Powell had bluntly stated that Libra raised issues related to privacy, money laundering, consumer protection, financial stability and many other issues. The US House of Representatives Financial Services Committee has sent a letter to Facebook executives such as Zuckerberg asking them to immediately stop all work on the digital currency project Libra and the digital wallet Calibra. ECB Executive Committee member Yves Mersch pointed out at a meeting of the European Central Bank system that Libra may weaken the ECB’s control over the euro, affect the liquidity of banks in the euro zone, and thus jeopardize the transmission mechanism of monetary policy, and may also erode The international status of the euro.
Regulatory overwhelming, even if Libra can still rely on Facebook "just" last wave, but other members are not so emboldened. Up to now, six organizations including PayPal have announced their withdrawal from the Libra Association. Currently, there are only 21 members in the association. In the original white paper, Libra has 100 target members.
Today, Libra is considering giving up a basket of currencies and turning to a series of stable coins. The timing of this news is also somewhat remarkable. On the 23rd, Zuckerberg will be the only witness to attend the hearing. The theme of the hearing is “Reviewing Facebook and its impact on the financial services and real estate industries”. Prior to this, Marcus had attended the Libra Hearings of the House Financial Services Committee and the Senate Banking Committee for two consecutive days in July this year.
Obviously, Marcus's explanation is not enough to eliminate regulatory concerns, and only the answer from Libra's number one seems to make sense. It is worth noting that this hearing will be the first time that Zuckerberg has officially appeared in Washington since the testimony of the Cambridge Analytical Incident in 2018. To be sure, this time Zuckerberg will once again be surrounded by many spotlights.
Under pressure, Marcus has acknowledged that Facebook still plans to launch the cryptocurrency in June 2020, but due to regulatory obstacles, it may not be possible to achieve this goal. For the launch time and regulatory pressure, Beijing Business Daily reporter contacted Libra, but as of press time, no reply has been received.
Beijing Business Daily reporter Yang Yuehan
Article source: Beijing Business Daily