Less than a day after Facebook officially announced its cryptocurrency white paper, Facebook has been criticized by regulators. Judging from the comments of regulators, it is clear that senior government and bank officials from around the world are preparing to oversee Facebook's Libra.
Licensing currencies such as Bitcoin have crossed national borders, and Libra plans to take advantage of this advantage, which is currently not possible with other central banks. Facebook is ambitious to become the world's first central bank, and regulators are wary of this.
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Bank of England Governor: Strictly review Libra
At the European Central Bank's annual seminar in Portugal, Bank of England Governor Mark Carney called on the G7 to conduct a rigorous review of Libra.
“Everything that works in this world will be systematic and subject to the highest standards of regulation. We will be in the Group of Seven (G7), the Bank for International Settlements (BIS), the Financial Stability Board (FSB) and the International The IMF level examines this issue very closely in a consistent manner. Open mind, but don't open the door."
Last year, the president publicly denied the cryptocurrency, but as Libra plans to make progress, he seems to be changing his attitude now.
Former FDIC Chairman: Suspected collateral reliability
In an interview with CNBC, former Federal Deposit Insurance Corporation (FDIC) chairman Sheila Bair expressed concern about the release of Libra:
"If I give them dollars to buy Libra, what do they do after they get the funds, and their explanation of this part in the white paper is a bit fuzzy… The reliability of collateral is a concern for me."
Facebook has 2.6 billion users worldwide. These users need to use more than 100 different currencies on a daily basis. Although Libra claims to be a stable currency in the future, it is unclear how Facebook will use its foreign exchange reserves to manage its investments.
Bair later reiterated his thoughts on the cryptocurrency supported by the Fed, but did not receive any feedback. The government's acceptance of new technologies is usually slow, but if Libra succeeds, it may change that.
French Minister of Economy and Finance: Libra cannot be a sovereign currency
French Finance Minister Bruno Le Maire expressed concern about the positioning of Libra on a European radio station. He said:
"It is impossible for Libra to become a sovereign currency. This cannot and should not happen."
Le Maire agrees with Carney's point of view and calls on the G7 – in his words, "the guardian of the global monetary system" – to report Libra's situation at the July meeting.
Chairman of the US House Financial Services Committee: Suspending Libra, waiting for the hearing
According to Coindesk's June 18 report, Maxine Waters, chairman of the US House Financial Services Committee, asked Facebook to suspend the development of the Libra cryptocurrency network until a hearing was held.
Member Patrick McHenry wrote to Waters:
“We know that there are many unresolved issues in the project, especially the scope, scale and compliance with the global financial regulatory framework. As policy makers, we have a responsibility to understand the Libra project. We need to break the rumors and guess and provide a discussion. Opportunities to assess the project and its potential for unprecedented impact on the global financial system."
Waters also stated in the statement:
“For the cryptocurrency industry, there is currently no clear regulatory framework to provide strong protection for investors, consumers and the economy.”
Facebook Libra encounters regulatory crisis
Bair’s call for the use of the Federal Reserve currency has a major problem. As she pointed out in the interview:
"(Federal Currency) will provide people with a very secure payment method. I mean you don't have to worry about the Fed defaulting, they can print their own money."
Although the Fed does have the right to print money, this comment highlights the difficulties faced by modern central banks. Their jurisdiction is limited by national borders, but Libra is not, at least not yet. Therefore, for compliance reasons, Libra needs to be circulated around the world, especially considering its hands from the centralized entity Facebook, which is likely to be supervised by relevant departments of various countries, and the future development path will not be smooth.
In contrast, Bitcoin, as a truly decentralized cryptocurrency, has achieved borderless transfer on a global scale and is a true global payment network.