Ever since Facebook launched the Libra’s white paper, the whole crypto community is been abuzz. Some are strongly criticizing the project while some see it as the future or the savior of crypto. Joseph Stiglitz, a Noble Prize winner economist, is teaming up with the people that distrust Facebook’s Libra.
According to a recent article published on MarketWatch, Stiglitz affirmed that only a fool would trust Libra. He believes that Facebook is not the kind of company that anyone should trust and that the banking sector took way longer to reach this level of distrust.
There are several problems with Facebook’s initiative. According to him, Libra could work as a shadow economy, a vehicle that could be used in illegal activities such as money laundering.
He does acknowledge that the banking currently has problems, but he affirmed that they are mostly due to the lack of competition, especially in how to make payments. This lead people to pay a lot more than they should for their transactions.
Stiglitz also noted that a possible business model for Libra could be to keep an interest paid on assets that used to be the underlying value of the stablecoin and that it makes no sense to deposit money there is there is no interest at all.
According to him, many people who are engaged in criminal activities are willing to pay a lot to avoid having their corruption detected and that governments should shut Libra down if they believe that this is the goal.
He also believes that Facebook could profit from the data of the transactions made by Libra, which is another considerably big problem in his view. Facebook has been faced with a choice between money and honoring their promises before and we all still remember that Zuckerberg picked money.
Japanese Regulators Are Afraid Of Libra
The Noble Prize winner is not alone in his crusade against Facebook’s Libra. Harukiko Kuroda, the governor of the Japanese central bank, affirmed that people need to be careful in order to increase the acceptance of such a token because it could have a negative impact on the financial stability of the country.
As the users buy Libra, the money goes to a basket of tokens, but no one knows what assets currently comprise this basket. This was, in his view, mostly done to avoid the national regulation of any country in particular. The users will not receive an interest rate on the assets, too, which means that Facebook probably will.
It seems that no one is actually very trusting that Facebook’s project will be something good for society, so we’ll possibly see a lot of controversy coming up soon.