Libra Doesn’t Usurp the State but Can Disrupt Banking, Claims Facebook

In an interview with French news publication Le Monde, Clegg addresses the billion people who lack access to banking facilities but have access to a smartphone. He identifies that these are an ideal market for a low-cost remittance service since they are often dependent on money from overseas. Calling the current system expensive, bureaucratic, and very-closed, Clegg argues that a stable currency, that these people could use via their mobile phone, would be world-changing. In addressing the question of whether Facebook considers itself as powerful as a nation state, Clegg responded that Libra’s governance system of 20 permissioned transaction validators highlights that the company itself does not want to be in control of the financial system it is attempting to build. He then states that there has been consistent resistance to the privatization of all kinds of industries around the world — like airlines and telecommunication firms, for example. He argues that digital-based currency systems launched by private companies will be no different. If the technology improves the lives of a huge number of people, which Facebook clearly thinks Libra has the potential to do, then governments of the world should welcome stability — rather than force their citizens to transact using wildly-volatile currencies like the Venezuelan bolivar. Clegg was then asked if Facebook is concerned that it may be releasing something which is vulnerable to future misuse. The former politician respondsed:

“Our cryptocurrency will be fully regulated. We have discussed with central bank governors, with the Securities and Exchange Commission in Washington [the regulator of financial markets in the United States], with the European Central Bank … This cryptocurrency will be very different from anything that has been tried so far. It will meet current standards for vendor or customer identification processes.”

He goes on to admit that, Facebook has been unable to predict all the consequences of the applications and social networking tools it releases. However, the firm is investing heavily in ensuring that everything it does is compliant with existing regulations. What do you think? Will Libra seriously shake up the banking system — and will governments let it? Let’s hear your thoughts!