Facebook Says Central Banks Have Nothing to Fear From Libra

Facebook Says Central Banks Have Nothing to Fear From Libra
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Facebook is once again defending Libra, this time against fears that the cryptocurrency could replace sovereign currencies and threaten central banks’ control over money creation, according to Bloomberg.

David Marcus, the executive leading the project, posted a series of tweets the same day members of the Libra Association met with regulators convened by a G-7 working group in Switzerland. He argued that creating Libra isn’t the digital equivalent of printing U.S. dollars or minting new euros. The simple existence of Libra, he says, doesn’t create new value.

“Recently there’s been a lot of talk about how Libra could threaten the sovereignty of nations when it comes to money,“ Marcus tweeted. “Libra will be backed 1:1 by a basket of strong currencies. This means that for any unit of Libra to exist, there must be the equivalent value in its reserve,“ he tweeted. “As such there’s no new money creation, which will strictly remain the province of sovereign nations.“

Currency competition is yet another sticking point for wary regulators. In a follow-up call after Marcus’s tweets, Christian Catalini, the lead economist inside Facebook working on Libra, declined to say whether or not the issue came up during Monday’s meeting. But he did say that this element of Libra is one of many that are misunderstood or not correctly interpreted. “All of the design of Libra is really around being a complement of fiat [currencies], not a substitute,“ he said.