Super sovereign currency or payment method? Summer Davos debates the cryptocurrency Libra

“How do you understand the Libra project of the global technology giant Facebook?” At the 2019 World Economic Forum's New Champions Annual Meeting on July 1st, this cryptocurrency was once again controversial.

"Daily Economic News" reporter noted that two weeks ago, the global Internet giant Facebook and 28 institutions released a white paper on the encrypted digital currency Libra project. According to the white paper, Libra's mission is to create a simple, borderless currency and financial infrastructure that serves billions of people.

After the news was released, more than one financial industry media made a "stone-breaking" evaluation. Libra is considered to be a super-sovereign currency, and some even regard it as the prototype of the "world central bank." In the view of Zhu Min, dean of the National Finance Research Institute of Tsinghua University, Libra will pose a huge challenge to the existing global decentralized monetary system, especially the dollar system that allows the world to “hang the line”.

"Underlying cognition" is often the basis for understanding and accepting new things. The first controversy brought about by the new Libra is how the parties should define Facebook's long-planned Libra.

Two sounds of the Libra property

As a new type of cryptocurrency, Libra's risk issue is always the focus of discussion. What is puzzling is, what is the property of Libra?

Zhang Wei, the founder of Luhan Capital, represents a point of view. She believes that Libra's corresponding target should be Alipay, which is a new payment method.

“Although there is a voice that says it is a cryptocurrency, if you analyze its white paper, you will find that Libra is very different from many white papers in the previous ICO (first coin-issuance) project.” Zhang Wei pointed out, “It has asset collateral and guarantees, The current business scenario is cross-border payment, and it also includes payment methods that are not available in the existing banking system."

Zhang Wei’s point of view fits the development direction of Facebook to a certain extent. The Libra project is a Facebook program that has been around for many years, and "payment" is one of the key goals of Facebook with billions of users worldwide. Zhang Wei pointed out that whether it is the use of blockchain technology or other emerging technologies, "one of the main purposes is to lower the threshold of technical facilities for payment."

Some cryptocurrency industry insiders also said in a live interview with the "Daily Economic News" that Libra is used in the payment field first, or helps Facebook to avoid stringent regulatory requirements.

Zhu Min, dean of the National Finance Research Institute of Tsinghua University, holds different views on this. In his view, Libra is not a payment system, but rather similar to the concept of electronic currency and payment. The difference is that the previous view was mainly in a country, and Libra is global.

“Libra contains three core concepts: first, Libra has reserves, principals and bonds as collateral, a basket of currencies for labeling and pricing, so the core concept is 'currency'; the second core concept is 'cross-border'; The three are to combine the central bank's policy considerations with the bank's payment function." Zhu Min pointed out.

Zhu Min said that Libra, as a currency, will have a big impact on the existing monetary system, financial system and future reserve system, and should not be taken lightly. "But it can't be successful, I don't know, it still has a lot of problems."

On the other hand, while the problem exists, "this framework is controllable." Zhu Min bluntly said that although Libra still has problems such as leverage, reserves, and central management system, "but we also have confidence in Libra because Libra will pose a huge challenge to the existing global decentralized monetary system, especially to the world." Life is hanging on the first line of the 'dollar system.'

Can it promote innovation and upgrading of the banking industry?

In any case, Libra's release seems to bring new life to the cryptocurrency. When it comes to Libra, the co-founder of the blockchain innovation company Hedera Hashgraph, Leemon Baird, is particularly excited. Not long ago, they quickly found Facebook to discuss the possibility of cooperation.

“The release of Libra has made more people understand the cryptocurrency industry.” In an interview with the “Daily Economic News” reporter, Baird said that the release of Libra has driven the development of the cryptocurrency industry, and the market value of cryptocurrencies has risen this year. relationship.

The enthusiasm of investors is rising. As of now, the Libra project on GitHub has been “saved” or “starred” by nearly 10,000 users, and represents an early stage open source participant interested in this project.

In Zhang Jian's view, if Libra can explore success, it may affect the existing ecology of the banking industry.

“Although I think that Libra has not yet become a 'world central bank', it has opened up a path. As other institutions continue to join, everyone will gradually form their own system and gradually explore the form of 'banking innovation'. Zhang Wei pointed out.

The Governor of the Bank of England once commented that Libra should be open to the brain rather than open its doors. In fact, Libra brings a variety of known risk challenges and unknown consequences, and there must be a clear understanding of this.

Previously, the international regulators, the Financial Stability Board and the UK Financial Market Conduct Authority, had said that they would not allow the world's largest social network to launch its planned digital currency without critical scrutiny.

At the 2019 World Economic Forum Global Leaders Annual Meeting, the performance of banking institutions was also more restrained. Asked if he would become a Libra node, Jane Metzger, managing director of Citibank and head of corporate and investment banking in Asia Pacific, bluntly said that it would take some time to observe its development. “Citibank always embraces technology, but it’s important to embrace it in a way that makes the regulator feel comfortable and enjoyable.”

“After the release of the Libra white paper, the bank’s response was calm and the response of the regulator was strong.” Huang Yi, deputy governor of the Construction Bank, concluded that “it’s hard to say that it’s hard to add, but Libra deserves a focus on global financial markets. Once Libra succeeds, it is not a challenge to the financial industry, but a subversion."

Source: Daily Economic News

Every reporter, Yang Afei, Cheng Xiaoling, every edited by Liu Yanmei