- IMF Chief Economist worried about Libra’s negative effects on the market
- Regulators around the world are worried about Libra and its influence on the crypto space
Gita Gopinath, a chief economist at the International Monetary Fund (IMF), said that it is important for regulators around the world to address the risks related with Facebook’s recently announced digital asset Libra. Gopinath said that during a conversation with Reuters on July 17.
IMF Chief Economist Urges Regulators To Regulate Libra
Facebook, the largest social media network in the world, announced on June 18 they were going to release a stablecoin to the market called Libra. However, regulators all over the world are worried about the effects that this virtual currency could have in the market.
During this conversation with Reuters, Gopinath outlined the major risks related to the stablecoins, which includes data privacy, consumer protection, and also backdoor dollarization. Nonetheless, the economist claims that the digital currency could be very positive to increase financial inclusion.
About it, Gopinath said:
“If you look particularly at countries that are not reserve currency countries, would this lead to backdoor dollarization? All of these questions (and) whether there will be enough checks and balances in place to prevent money laundering … are very important.”
Just yesterday on July 16, David Marcus, the head of Facebook’s blockchain project, defended Libra at the United States House of Representatives Financial Services Committee. Nonetheless, the present U.S. politicians and lawmakers criticized Facebook’s behavior in regard to data privacy.
The virtual currency Libra is going to have a stable value and be backed by several fiat currencies, including the euro, the U.S. dollar, the Japanese yen, and the British pound. They also want to make it easier for individuals to process transactions and send funds.
At the same time, U.S. President Donald Trump commented on Twitter that if Facebook wants to offer banking services, it will have to follow banking regulations as many other companies and institutions are already doing. This is in line with what Steven Mnuchin, the secretary of the treasury said a few days ago during a briefing about virtual currencies.
Other countries such as the United Kingdom, France, Italy, and Singapore have also raised concerns about Libra and which is the impact that this digital asset is going to have in the market.