“Libra is an interesting idea that will never become a reality.”
According to Barry Eichengreen, a professor at the University of California, Berkeley stablecoins, and Libra, in particular, will not be able to take a dominant role in the current financial system.
Earlier he had a chance to talk with developers and investors of popular “stable” cryptocurrencies. The economist concludes that stablecoins are an extremely fragile financial instrument that can be affected by attackers.
He decided that all of my interlocutors were well versed in blockchain technology, but their knowledge of monetary policy was extremely limited. As an example of a “problematic” stablecoin, he cited the Facebook crypto project called Libra. Eichengreen is convinced that “Libra is an interesting idea that will never come true.”
The professor also fears that if Libra is launched, it could undermine the effectiveness of the national monetary policy in both developing and developed countries. He noted that citizens of countries with inflation currencies may abandon the state fiat in favor of the stablecoin Facebook.
We will remind, earlier representatives of Libra, against the backdrop of criticism from the government, decided to change the concept of the project. The team refused to issue one stablecoin in favor of creating several cryptocurrencies at once: LibraUSD, LibraEUR, LibraGBP, LibraSGD, and the multicurrency “stable” Libra Coin. The project specialists also announced their readiness to service national cryptocurrencies. The digital wallet of the Libra crypto project has been renamed from Calibra to Novi.
Recently, the media reported that the Libra team continues to work on a multicurrency stablecoin.
Ripple recently launched Libra’s international transfer competitor. The goal of the PayID platform is to erase all borders between payment systems.
Recall, that the well-known TON of Pavel Durov failed under the pressure of the SEC. The US Securities Commission is actively monitoring the Libra project. Therefore, states will tighten control over the launch of such global projects so as not to create competition primarily with payment systems, banks and fiat money.
However, according to an expert at CEX.IO Broker, this is not the only problem that Libra may encounter:
“The constant scandals surrounding Facebook over the leak of user data are damaging the image of Libra. The US authorities have repeatedly sued the Zuckerberg company, accusing Facebook of monopoly, falsification of news and information, support for racism, and the deletion of user data. Many investors are alarmed by this situation. So far, the company has managed to cope with reputation crises, but external pressure is increasing. ”