Does Facebook’s Libra Token Really Pose a Threat to the Central Banks of the World?
- Jerome Powell, the Chairman of the Federal Reserve, was recently quoted as saying that he and his team was closely studying Libra in order to determine the best course of regulatory action for the digital offering.
- Governor of the Bank of England, Mark Carney, is of the belief that the British government should have an ‘open mind but not an open door’ towards Libra.
As per a recent op-ed piece penned by former World Bank Chief Economist ‘Kaushik Basu’, FBs much-hyped crypto offering ‘Libra’ has the potential to completely make national currencies (such as the US Dollar, Euro, Rupee) ineffective and essentially worthless.
Expounding his thoughts on the subject, Basu was quoted as saying:
“…monetary policymakers should be especially worried, because they may find it much harder to control unemployment and inflation in a Libra world.”
A Closer Look at the Situation
In Basu’s article he states that as we move into the future, Facebook users may start to adopt Libra at a scale where national currencies may be rendered useless.
Not only that, Basu also points out that as inflation rises, Facebook’s money creation powers will also surge quite substantially — thus, it is important that the asset be regulated in a manner that allows for the healthy growth of the global finance engine.
“…We may then need new laws and global treaties to mitigate potential negative fallout and curb the power of the organizations that run these new currencies.”
The ex-World Bank executive believes that banning Libra will not yield any fruitful results rather it will make people even more suspicious of central banks than they already are.
Jerome Powell — Chairman of the Federal Reserve — recently gave an interview in which he indicated that his team was looking at crypto assets ‘very carefully’ and that Libra will be held to extremely high regulatory standards because of the currency’s adoption potential.
Maxine Waters — Chairperson of the FSC — also indicated that Libra will most likely not be allowed to compete with the US dollar. In this regard, she has already chalked out a number of meetings that will look to dissect the ongoing Libra situation.