Facebook’s Libra Stablecoin Put Central Banks On Notice, Causing Bankers To Look Into CBDC’s

A former Executive of the Bank of Japan (BOJ) has said that Facebook’s Libra prompted Central Banks to invest more resources in Digital Currency research sooner than expected. According to a report by Reuters on Jan 22, Hiromi Yamaoka, a former head of settlements and payments at the BOJ, noted that regulators might have done so to keep Libra in check besides tapping into opportunities in blockchain.

The regulation of digital currencies is still a grey area in FinTech; central banks across the world are yet to figure a proper regulatory ecosystem. However, efforts are underway by a number of regulators in developed economies to address the underlying challenges in token economies. So far, countries like Switzerland, Sweden, Canada, Japan, Britain and the Euro Zone have already agreed to work collaboratively on the use case of digital currency. Yamaoka implied:

“The latest decision is not just about sharing information. It’s also an effort to keep something like Libra in check […] Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

Hiromi told Reuters, Central Bankers have to keep up with the incentives that come with digital payments and settlements;

“Something like Libra would make transactions costs much cheaper. Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

Central Bank Digital Currencies (CBDC) in Monetary Policy

Hiromi currently a board member with IT consultancy giant, Future Corp, is still in touch with policy implications having worked at the BOJ. He countered the narrative by some academics who recently argued that CBDC’s could be used to driven interest rates further down to negative values. Hiromi said,

“There are increasing doubts about the effect of negative interest rates as a policy tool.”

“If so, do you want to issue CBDCs for the sake of deploying a policy with questionable effects?”

As it stands, China is the most advanced in terms of research and a CBDC development for its ecosystem. The project is expected to launch in 2020 although not much has been revealed about its specifics. Peer economies like the Euro Zone and Japan have instead focused on blockchain implementation noting that they have no short-term plans to issue a digital currency.

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Author: Lujan Odera

Vodafone Becomes 8th Company to Leave Facebook’s Libra Association

  • Other companies to already leave Facebook’s digital currency endeavor include PayPal, MasterCard, and Visa.
  • Vodafone and Facebook have not released any further comment.

The Libra Association is been the subject of much turmoil since releasing the white paper for it’s digital currency, receiving criticism from lawmakers and regulars around the world. In spite of this, the association has pressed on, managing to initially secure 28 corporate backers to lead the way. Unfortunately, this group has already bid farewell to seven companies, and Vodafone has become the eighth to follow suit.

A statement from the Libra Association confirmed this change, and says, “We can confirm that Vodafone is no longer a member of the Libra Association. Although the makeup of the Association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient. The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system.”

BitcoinExchangeGuide has already reported on other backers to have already left the association, including PayPal, Visa, MasterCard, eBay, Stripe, Booking Holdings, and Mercago Pago. Vodafone left on Tuesday, January 21st, and will instead use their resources for M-Pesa. M-Pesa is a pre-existing digital payment service that Vodafone already uses, and it presently serves six regions in Africa.

When Facebook’s project was originally announced, backers were expect to support it with $10 million in investments. However, that statement was made far before their backers started pulling themselves and their resources from the project.

Jerome Powell of the Federal Reserve shed some light on the concerns held by regulators, commenting that Libra introduces “serious concerns regarding privacy, money laundering, consumer protection, [and] financial stability.” A working group has since been created by Powell to investigate the concerns.

At this time, neither Facebook nor Vodafone has responded to requests for additional comments.

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Author: Krystle M

Facebook’s Active-User Network, A Third of Global Population, Sets Libra Apart From Others: Fed

The Governor Lael Brainard, of the US Federal Reserve on Wednesday stated Facebook’s digital currency project Libra faces a “core set of legal and regulatory challenges.”

Social media giant’s stablecoin that is linked to fiat money and other sound assets to mitigate fluctuations in the price of cryptocurrencies like Bitcoin, remains unproven with a vague set of permissions for customers.

Stablecoins put Consumers at Risk

Brainard said speaking at a recent meeting in Germany,

“What would set Facebook’s Libra apart, if it were to proceed, is the combination of an active-user network representing more than a third of the global population with the issuance of a private digital currency opaquely tied to a basket of sovereign currencies,”

“Without requisite safeguards, stablecoin networks at global scale may put consumers at risk.”

As we have seen, Libra isn’t any step closer to obtaining any pull among major regulators. However Blockchain capital in its predictions for 2020 said Libra will, in fact, receive the green light for a dollar-backed stablecoin in the face of competition from China.

However, some of the companies like PayPal, Visa, and Mastercard that were part of the consortium to support a digital currency with hard assets have already withdrawn. Recently, Libra quietly updated its white paper to remove the dividends payable to early investors i.e. Libra Association members.

High Threshold of Legal and Regulatory Safeguards Needs to be Met

While central banking institutions worldwide are looking into how to manage this growing sector, many of them are on their way to creating and launching their own digital currencies.

The technology underlying the digital currencies, however, has the benefits in terms of decreasing the expense and expediting of the transfers of money, pointed out Brainard. But she also said there are “advantages associated with current arrangements” that is the issuance of physical cash as well.

She further talked about the all barriers with the chances for fraud and their uses for money laundering that cryptocurrencies still need to clear. Theft and fraud losses related to cryptos are estimated to be doubled to about $4.4 billion in 2019, Brainard said. She added,

“Given the stakes, any global payments network should be expected to meet a high threshold of legal and regulatory safeguards before launching operations.”

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Author: AnTy

Facebook’s 6-Year Wait Comes to An End: Patent for Personal Finance Tracking Tool Gets Ratified

Facebook’s 2013 patent for a personal finance tracking tool gets approved reports BeInCrypto. As per the news outlet, the tracking tool compares a user’s financial spending to those based on relatable benchmarks. This will allow a user to have an idea of where they lie in terms of percentile.

Here’s an extract of the patent that has been shared:

“Allows its users to obtain reports of their spending compared to various benchmarks. The benchmarks may be for various demographic groups, networks to which the user belongs, groups of users connected to a user or any other suitable grouping of users.”

Given that the patent has been accepted several years later since filing for it, it becomes questionable whether this is still a goal in place for the social media outlet. With the concerns they currently face in relation to their Libra project and having been under the spotlight for breach of data privacy, taking on a finance tracking tool might not be considered.

Speaking of the Libra project, so far, leaders around the world seem to turn down the idea simply because of the social media’s scarring with data privacy and the fact that such a project would result in them having too much power. Given that Facebook has also been accused for having the ability to influence elections outcomes, adding more power can be too dangerous, especially in the financial world.

Facebook has since lost a number of partners including the likes of PayPal, Visa, Mastercard, eBay and Stripe – all early members of the Libra Association – and according to CEO, Mark Zuckerberg, whether they choose to pursue Libra or not rests in the U.S’ decision regarding regulatory approval.

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Author: Nirmala Velupillai

Calibra Association’s Kevin Weil: Libra Won’t Spread As Fast As Facebook’s Social Media Network

Kevin Weil, the vice president of products at Facebook’s subsidiary Calibra, has recently talked about the expansion of the main project of the company. According to him, the Libra stablecoin may take years, if not decades, to “catch on”.

He talked about it at the Web Summit, which happened this week in Lisbon, Portugal. Weil said that this is a work that is “worth making”, but it will be very hard and slow to build a real user base for the new digital asset.

Weil also claimed that the Libra Association is still determined to be a successful organization, despite losing some important members recently. He was talking about companies such as PayPal, Visa, and Mastercard, which decided to leave the association during the government crackdown that happened with Libra a few weeks ago.

However, he believes that the members which are still a part of the foundation are very focused on its success. Weil also pointed out that now the Libra Association is more than what it was 18 months ago because of their involvement.

During his presentation, he also affirmed that people won’t be forced to use Calibra’s wallet. Each user will have the freedom to use whatever wallet they like and the CEO of Facebook, Mark Zuckerberg, promised that the social media company will not interfere directly with the digital currency.

Curiously, private Libra wallets are already available. ZenGo, a developer from Israel, for instance, has just launched a wallet compatible with the Libra network a few weeks ago. If this catches on, we’ll probably have a lot of Libra wallets, something that may end up appeasing regulators a bit, as it will take some of the power away from Facebook and the association.

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Author: Gabriel Machado

Facebook’s Libra Will Operate More Like An Email Tech Than PayPal: Calibra VP of Product

According to Facebook’s Calibra VP, Kevin Weil, Facebook’s led crypto project, Libra is set to operate like an email but not like PayPal, Cointelegraph reports.

Weil was giving a speech during the Web Summit held in Lisbon, Portugal where he emphasized that the crucial aspect in Libra will be interoperability, which is at the central of email operations.

While encouraging the global community to collaborate, Well said,

“You and me don’t have to collaborate on which email provider we are going to use before we send each other an email. We don’t have to choose which browser we are going to use tailored to which individual website you’re going to go to. These things are protocols, and as long as you build to the protocol everything’s interoperable. Libra is the same way.”

Asked when the cryptocurrency will be launched, Weil stated that he was not sure but insisted that it will not take long. He also explained that the crypto platform will be different from Facebook’s data center and will not be viral like other social platforms.

The statement by Weil comes just days after Calibra’s head David Marcus clarified that firms which are not part of the Libra Association will be able to provide services using the platform. Marcus explained that even firms like Visa and Mastercard which have opted out of the Libra Association will still have the capacity to give out cards for use in Libra platform.

During his speech, Weil explained that it would have been prudent to introduce Libra three years ago to benefit from the greatest crypto bull run in history so far. The VP said that Libra would have benefited immensely when Bitcoin hit its all-time high value of close to $20,000. He, however, stated that this was the right time to launch the cryptocurrency. Weil also told the audience that he was slow to believe in cryptos but became an avid Bitcoin worshipper in 2015.

Libra has elicited mixed reactions from policymakers around the world with some voicing their fears over data privacy and it is now uncertain when the crypto will be launched.

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Author: Joseph Kibe

China’s SAFE Regulator: Libra Could Be Used For Mischievous Cross-Border Payments

A senior Chinese regulator, Sun Tianqi recently spoke about the Facebook’s Libra project. According to the Chief Accountant of China’s State Administration of Foreign Exchange, Libra needs to abide by the same kind of law that other foreign currencies do or it will be banned from the country.

According to Sun, countries that asses Libra could threaten state control over capital should ban the token, as it could make it much easier for criminals to transfer money around.

He affirmed that financial technology can bring innovation and efficiency to a market, but also that illegal cross-border transfers could be made if the technology is not properly regulated. It is because of this that all countries should be very concerned, especially in emerging markets, as they could be directly harmed by Facebook’s new stablecoin.

He stated,

“Financial technology can promote the opening up, innovation and development of a country’s financial market, but it could also bring a lot of illegal cross-border financial activities. This should be a matter of great concern to all countries, especially emerging markets.”

Sun is also concerned that, in China’s case, people would stop use of the yuan in domestic transactions, which would limit the country’s ability to enforce economic policies, as people would be easily able to circumvent them.

For instance, the government can create a downward pressure on the yuan to boost exportation. With people using Libra instead, this would probably not be possible.

His comments are pretty much compatible with what other experts are confirming in China. Recently. Zhou Xiaochuan, a former governor for the People’s Bank of China, stated that projects such as the Libra would end up harming the Chinese economy and national payment systems. Wang Xin, head of research at the bank, was another figure that defended this idea.

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Author: Gabriel Machado

Swedish Central Bank Head: Facebook’s Libra Was A ‘Shake The Tree’ Event To Kick Start Reform

Sweden’s central bank chief has explained that Facebook’s Libra cryptocurrency should serve as a catalyst for central banks around the world to rethink their role and reform to incorporate the digital age.

In an interview with CNBC’s Squawk Box Europe Stefan Ingves, governor of the Riksbank, explained that the Facebook’s led Libra project was an ‘incredibly imperative catalytic event’ that is forcing central banks around the world to rethink their primary aspect of money production and control.

The governor explained that part of the job for every central bank is to issue money that is convenient for use by the citizens of the country and the time has come for central banks to factor in the digital era or age when it comes to production of money.

According to Ingves, the Riksbank has had to reconsider its money development procedures in the wave of private currencies that have mushroomed in the recent past. In light of this, the Riksbank has been looking at the potential of issuing digital money even as use of cash in Sweden has declined tremendously in the recent past. Most of retail outlets in the nation do not accept physical or fiat currencies and are discouraging their customers from paying in cash.

The swedish central bank is in the process of piloting a digital currency dubbed e-krona before the end of the year and could be rolled out after the assessment of the piloting stage. According to Ingves, creation of a new currency is almost done and marks an unprecedented event that occurs only once after various centuries.

Sweden is not the only country that exploring the digital money aspect. Since Facebook announced its plans to venture into the digital currency market with its Libra cryptocurrency in June. Key among them is China which is developing its own digital currency to counter Libra with Chinese central bank announcing the project is almost done and launching will be done soon. Additionally, Swiss central bank announced last week that it was looking at how the virtual currencies could be used in trading.

CoinDesk reports that the Libra Association met in Geneva on Monday to agree on an official charter for its 21 initial members.

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Author: Joseph Kibe

US Senate Threatening Libra Association Members to Quit or Face “High Level of Scrutiny”

Recently, Stripe, Mastercard, Visa, and eBay left Facebook’s cryptocurrency project Libra, taking this exodus tally to 5, when just a week back PayPal left the Libra Association too.

In June, the social media giant unveiled its plan for Libra, announcing its intent to roll out the international digital currency next year. The company said the fiat backed cryptocurrency would be controlled by the Libra Association, a non profit made up of international companies. That group of companies initially started with 28 companies, and is now down to 23 as companies start to face regulatory obstacles. This prompted David Marcus, lead head spokesmen to gain respect for Bitcoin and what it went through as a new crypto-project.

Libra has been already facing extreme regulatory scrutiny all over the world, and now the payment firms have announced their departure.

US Govt. Forcing Companies & CEOs to Dump Libra

However, the decision to quit Libra by the companies seems to be forced by the US government. A letter by the US Senate to Patrick Collison, co-founder and CEO of Stripe has surfaced online where the Senate is talking about its “deep concerns” — risks to consumers, regulated financial institutions, and the global financial system — about Libra and Libra Association.

“We urge you to carefully consider how your companies will manage these risks before proceeding, given that Facebook has not yet demonstrated to Congress, financial regulators—and perhaps not to your companies—that it is taking these risks seriously,”

the letter reads.

It further states that Facebook fails to provide a clear plan for how it will prevent Libra from facilitating criminal terrorist financing, destabilizing the global financial system and interfering with the monetary policy and is deflecting addressing on these risks to the members of the Association.

“You should be concerned that any weaknesses in Facebook’s risk management systems will become weaknesses in your systems that you may not be able to effectively mitigate. These risks are not hypothetical.”

Or Get Ready to Face its Wrath

The US Senate further pointed out how Facebook Messenger contributed to Child sexual abuse photos and videos and warned about the implications of combining encrypted messaging with embedded anonymous global payments via Libra.

“Your companies should be extremely cautious about moving ahead with a project that will foreseeably fuel the growth in global criminal activity.”

The government is outrightly threatening these companies to dump Libra or to

“expect a high level of scrutiny from regulators not only on Libra- related payment activities, but on all payment activities.”

In response to this Gabor Gurback, digital asset strategist/director at VanEck shared his disappointment on Twitter saying,

“Many executives may have chosen not to experiment and innovate in order to avoid regulatory pressure! Sad! America can do better!”

He also had this to add a few days back about the departures of Visa and Mastercard:

Every company that is leaving #Libra is likely, in some ways, forced to do that. It’s unfortunate and I am sorry that capital markets aren’t free. > Now you have a first hand understanding why censorship-resistance is important! > Welcome to #Bitcoin!

And finally, Alan Silbert, former Capital One Vice President wrote:

“No matter what your position is on Libra, it is unacceptable for the government to be sending a letter like this to private companies,”

“}” data-sheets-userformat=”{“2″:13057,”3”:{“1″:0},”11″:3,”12″:0,”15″:”Open Sans”,”16″:11}”>Latest Libra Coin News and Facebook Crypto Updates

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Author: AnTy