Former Executive of Bank of Japan Believes Libra Could Undermine Current Financial Policies

As countries struggle to determine the best way to handle Libra, some countries are taking the bold stance to ban it entirely. However, Hiromi Yamaoka believes that the global coordination of regulations could serve a better purpose. Is this type of cooperation possible?

  • A former executive with the Japanese bank believes that globally coordinated regulation of Libra could eradicate complications with the current financial system.
  • Facebook has stated that the launch of Libra may not ultimately happen.

The introduction of the Libra whitepaper has stimulated a big conversation on how the Facebook-based stablecoin will impact countries around the world. Worried of what Libra could do to the traditional financial infrastructure, some countries have already banned the stablecoin a year ahead of its launch. Hiromi Yamaoka, a former executive of the Bank of Japan, is warning that the widespread us of Libra could ultimately undermine the central bank monetary policies of affected countries.

Yamaoka, who was in charge of overseeing research into digital currencies for the bank, stated,

“The emergence of Libra would pressure policymakers to discipline themselves.“

However, the former exec was clear that the issues are most likely to occur is consumers use Libra more than the local currency in each country.

Even though countries with a strong market trust in their fiat currencies won’t likely have many concerns to worry about, Libra could ultimately trigger or speed up the capital flight of countries with low market trust. Realistically, if either scenario, Yamaoka believes that even the launch of Libra alone would put pressure on the current regulators “to discipline themselves,” while being careful not to undermine their own currency’s value.

Facebook is aiming to back Libra with the use of a basket of real assets that are tied to major currencies. If the assets in this basket change, the policymakers are worrisome of market movement that could ultimately results, as well as changes in exchange rates. Yamaoka, while speaking to Reuters, said that these changes would end up infringing on the sovereign policies of these nations.

As Yamaoka sees it, the only way to protect countries from these risks is to coordinate the regulation of Libra around the world, since Libra is due to be used globally. If there’s any difference between the policies that the countries impose, Yamaoka says that the rules would not be effective, making them useless.

Regulating at a global scale could hinder the launch of Libra, and

“there’s no way to stop innovation,”

says, Yamaoka. However, banning Libra entirely would not be effective.

As more regulators have voiced their opinions on how Libra should be handled, Facebook has already warned investors that there’s a possibility that Libra will not end up launching at all.

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Krystle M
Krystle is an American cryptocurrency blogger that wants to see the future of crypto and blockchain technology evolve. She has been writing about cryptocurrency for about a year, with a special interest in blockchain technology and regulatory measures around the world. While away from writing and learning about the changes in the cryptocurrency industry, she likes to indulge in science fiction novels and further her experience in playing both guitar and piano.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer


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