A member of the Federal Reserve Board said that the cryptocurrency Libra announced by Facebook, may pose risks to consumers, because of the lack of clarity of their rights with regard to the basic assets of the symbol and the system as a whole.
Lyle Brainard, who chaired the Federal Reserve's Committees on Financial Stability, Federal Reserve Affairs, Consumer and Community Affairs, Payments, Clearing and Settlement, explained his criticism of Libra during a speech at the Future of Money in the Digital Age Forum in Washington, DC , October 16
Brainard evaluated a number of existing payment networks on digital platforms, such as Alibaba and WeChat, noting that through some estimates, AliPay and WechatPay handled more than $ 37 trillion in mobile payments in 2018 alone.
However, Facebook's attempt to launch a stable global currency network - given its 2.7 billion potential user base - has given particular urgency to the debate about current and future forms of money, and “threshold questions about legal and regulatory safeguards, financial stability and monetary policy.
He noted that despite consumer and legal protection of bank deposits - through insurance, clear obligations in cases of fraud, and standardized disclosure of account fees and interest payments - it remained unclear what protection, if any, would be provided to balance users. He said consumers should be warned that stable currencies are likely to be completely different from the legally issued currency.
Global financial system and cryptocurrency race :
Apart from his strong focus on consumer protection, Brainard also shared his detailed view on the potential risks posed by Libra.
These include, but are not limited to, data security and privacy risks, their potential impact on banks' stable funding sources, central banks' implementation of effective monetary policy, and financial stability risks, exacerbated by a “potential uncertainty surrounding the authorities' ability to provide oversight, liquidity support and cooperation, he said. Across the border.
As reported in the report, analysts at RBC Capital Markets recently warned that if US regulators chose to “eventually abolish the Libra cryptocurrency,” the next central bank cryptocurrency could become the actual global digital currency in emerging economies.
