Korean regulators warn that Facebook's Libra may threaten the stability of the financial system

Korean regulators warn that Facebook's Libra may threaten the stability of the financial system

  

South Korean financial regulators say Facebook’s recent Libra cryptocurrency program will threaten the stability of the financial system.

The South Korean Financial Services Commission (FSC) pointed out in the latest trend report released on July 5, "What happens if 2.4 billion Facebook users worldwide convert one-tenth of bank deposits into Libra cryptocurrencies"?

If this happens, banks' solvency will decline and their loan reserves will fall, posing a threat to capital outflows in emerging markets.

The FSC is also concerned that as people convert legal tender into Libra, bank runs may occur during financial or foreign exchange crises. The simplification of Libra's cryptocurrency exchange and remittances will also limit the central bank's ability to control international capital flows. If Libra is widely converted into the currency of the central bank, the effectiveness of monetary policy will also be limited.

The agency also expressed concern that Libra may be widely used for money laundering without proper banking supervision. The agency added that “large financial institutions such as Goldman Sachs or JPMorgan” refused to participate in the Libra project.

According to the report, the project is a major threat to the traditional banking industry. If companies such as Facebook buy bonds instead of depositing client funds into banks, the bank's financial situation may deteriorate. If Libra offers almost free cross-border payment services, the trillion-dollar remittance income of Korean banks will be significantly reduced.

The FSC also pointed out that Libra is more likely to be commercialized than other cryptocurrencies. By providing financial services through social media infrastructure with billions of users, including Facebook, WhatsApp and Instagram, the company can more easily ensure convenience and price competitiveness.

The FSC stressed that the report was intended to “promote the understanding of Libra by the media and external pressures” rather than the official opinions expressed on it.

Currency search: Bitcoin search engine www.btcsearch.com

We will continue to update Blocking; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

Blockchain

The exchange vouchers in the hands of Afghan money dealers are the keys to the opening of the cyberpunk gate.

Written by: Li Painting In Iran, where the currency collapsed, one of the most important things in Afghanistan is the...

Blockchain

The so-called "heavy weight" is becoming "heavy and bad", only one correct decision can be made...

The bitcoin that started the day before yesterday skyrocketed, "boiling" the currency circle, and also &quo...

Blockchain

A picture of bitcoin bifurcation history

Below is a summary of the bitcoin bifurcation diagram. Although not all the forks are covered, the figure shows some ...

Blockchain

Is Bitcoin's sharp pullback rally really over?

Bitcoin dropped significantly during the day yesterday. While falling below the US $ 10,000 integer mark, it also fel...

Market

3 days up 1000! Demystifying the top three reasons why Bitcoin hit a new high in 2019

Since May 2018, Bitcoin has spent 13 months, once again hitting $9,300, setting a new high in 2019. However, just las...

Market

Mystery buying has repeatedly pulled up BTC, triangle finishing and waiting patiently

Judging from the absolute value of the transaction, 52,000 bitcoins were sold on May 19, and the transaction was only...