Moscow, June 26 — “News. Economy” Facebook Plans to release its own cryptocurrency Libra can encounter problems from regulators on both sides of the ocean. On 16-17 July in the United States scheduled two hearings in the Committee on the banking market of the Senate and the Committee on financial services of the house of representatives, respectively. During the hearing, legislators want to understand what are the implications for the American financial market can bring cryptocurrency from such a large Corporation like Facebook.
The financial stability Board (FSB) has warned world leaders that greater use of retail buyers of cryptocurrency requires “attention” from regulators
The head of the financial stability Board Randall Quarless wrote a letter to the heads of state and government who will gather for the Big twenty summit on June 28-29 in Osaka. Quarless said that technological innovation can make the financial sector more effective and comprehensive, and cryptocurrency at the moment do not pose a threat to global financial stability.
However, the Chairman of the financial stability Board stated that “the broader use of new types of scriptaction for the purposes of retail payments will require close attention from the authorities and ensure that scriptactive spread high standards of regulation.”
“FSB and bodies that set standards, will very carefully and in a coordinated manner to control risks and, if necessary, to consider additional multilateral responses,” said Quarless, who is also the Deputy Chairman of the Federal reserve’s supervision.
Cryptocurrency Libra, the output of which is announced by the social network Facebook in 2020 will be quite viable and can gain a high rates immediately after the release, analysts of rating Agency Fitch. “We believe that Libra includes improving elements of the existing technology of the blockchain, while solving some inherent drawbacks, namely the instability of prices and problems with the management,” reads the press release of Fitch, a member of the big three international rating agencies along with Standard&Poor’s and Moody’s.
Among the advantages of Libra Fitch experts indicate the binding of the cryptocurrency to back the Fiat basket of assets. “These measures can maintain price stability, to avoid speculation that observed in existing cryptocurrencies, and to increase the usefulness of medium of exchange and store of value that is key to the long-term viability,” writes the Agency.
According to credit analyst S&P Mohamed Damak, Libra is able to solve many problems inherent to cryptocurrencies, however, world government will not allow it to become a “parallel source of credit out of the monetary policy of Central banks”. “In this sense, Libra can be seen as a payment system similar to PayPal or WeChat, but bloccano and currency”, — stated in the review of the international rating Agency S&P.
“Despite the fact that its founders aimed to launch in the first half of 2020, the level of control (from regulators — ed.) could lead to some delays or limit on initial launch,” added Butwal.
Facebook ambitious plan to launch new cryptocurrencies have attracted the attention of American and European lawmakers the day after the announcement of the project, and some politicians have urged to suspend the payment service Facebook.
Commenting on the announcement of Libra, the Minister of economy and Finance of France Bruno Le Mayor declared that cryptocurrency Facebook Libra should not “become an independent currency.” He also added that “this cannot and must not happen” and “is not discussed at all”, calling the Central banks of the countries “Big seven” to examine the project and report to the meeting next month.
German member of European Parliament from the conservative Christian social Union, Markus Ferber spoke in the same vein. He said that Facebook can be a “shadow Bank” and that transnational corporations like Facebook should not be allowed to run virtual currency and work in “regulatory Nirvana”.
The Bank of England Governor mark Carney said that the currency will “be scrutinized for compliance with regulatory standards”. In Forrester claim that the regulators will probably question the Facebook data collection and management processes.
Chairman of the Board of the Central Bank of France Villeroy de Galhau said that those who start with Facebook stalkin Libra, should be responsible to deal with it comply with the legislation on prevention of money laundering, and they must attend to in order to obtain a banking license, if they plan to, de facto, to provide services that provide multi-purpose credit organization. France has warned that it will be necessary to obtain a banking license in all the countries where you plan to project Libra.
The Bank for international settlements (BIS) — the organization performing the function of a Central Bank for national Central banks — warned about the risks that cryptocurrency project Facebook is for the banking sector.
The BIS has released a report which stated that large technology companies such as Facebook, Amazon and Google, “rapidly occupy a dominant position” due to their extensive user bases. Such companies can make financial services more affordable and at the same time threaten the stability of the economy, competition and data protection, writes BIS.
In this regard, regulators in different countries need to take on the role for harmonizing the actions of large companies and banks. Their approach to this space should become “more extensive” focusing on financial regulation, competition policy and data protection, adds the organization.
“The challenge is to respond to the acquisition of major technology companies to the financial services sector to give the opportunity to enjoy the attendant benefits and limit the risks. Since the activities of such companies beyond regulatory perimeters and national boundaries, coordination of efforts of the authorities — national and international — is of crucial importance”, — says the publication.
The announcement of the launch of cryptocurrency Libra occurs on the background of the difficult situation for Facebook. The company recently was at the center of scandals involving the confidentiality of the data and has been criticized for spreading hate speech that caused the genocide in Myanmar. Facebook and other major technology companies also face attention to their growing influence and power, as well as to the growing calls for antitrust action against teggiano.
Technically, Facebook is a bit protect themselves, declaring that the project will be managed by LIbra partners, which were included in the non-profit Association Libra Association. This differs from decentralized bitcoin Libra. However, the code of the blockchain will be published in the public domain that will allow third parties to create apps for it.
To date, the Association has 28 co-sponsors, of course, including Facebook. The Association is engaged in the development and scaling of the network and reserve cryptocurrency Libra, which is designed to become the new world currency based on blockchain (the Blockchain Libra) and secured by a reserve (Reserve Libra). Libra will not be limited to just Facebook, and the Association hopes that, once completed, will be able to expand access to financial services for people around the world. The organization also controls the program of grants for socially important projects, collaborating with the global community and works with policy makers to contribute to the realization of the mission of Libra in life.
Apple, Google, Amazon and Microsoft project Libra is not yet supported. Major banks are also reluctant to enter the starting lineup because of doubts about the regulation. New cryptocurrency have to be approved by regulators like the securities and exchange Commission, which in relation to digital currencies have taken a wait.
Last week the Banking Committee of the U.S. Senate announced a July 16 hearing on Libra, and on July 17 the hearing will continue the Committee on financial services. The Chairman of the Committee on financial services of the house of representatives of Congress Maxine waters has called on Faebook to suspend work on the project of the digital currency. She stated that the U.S. government does not allow Facebook and its partners have organized in Switzerland, a platform for competition with the dollar. “Facebook continues uncontrolled expansion and increased access to the privacy of users… We’re aggressive and very fast to deal with what is happening with this new cryptocurrency,” promised waters.
Some experts believe that Libra can take the title of bitcoin the most popular cryptocurrency. Among the advantages of Libra — huge base of users of social networks Facebook and link to Vietnam currencies. It is assumed that the cryptocurrency from Facebook will not be subject to such breakneck volatility as bitcoin. Libra is controlled by the Association, and for the companies included in the composition, have the effect of a world government. Therefore, in terms of freedom of bitcoin as a decentralized system is more free and less dependent on the pressure of the authorities.
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