Why Facebook’s Libra Cryptocurrency Is In Trouble
The largest US banks told the Fed that they are unhappy with Facebook’s plans to launch its own cryptocurrency, as it threatens the monetary policies of the countries.
According to the minutes of the meeting of the Federal Advisory Council this month, advising the Fed on economic issues, Facebook is potentially creating a digital monetary ecosystem outside of sanctioned financial markets – or system «shadow banking».
Adding that as the popularity of Libra grows, the platform will attract more and more deposits, leading to a decrease in liquidity, and in the future, the abandonment of intermediaries may also extend to credit and investment services.
The advisory board includes the heads of 12 of the largest banks in the country, including Bank of America, M&T Bank and KeyBank.
At the quarterly meeting, bankers also noted that Facebook’s proposal could have negative consequences for monetary policy, reducing the ability of states to control, manage and influence the national economy..
Despite the dissatisfaction of banks with the digitalization of the financial system, two members of the Financial Services Committee of the US House of Representatives proposed Federal Reserve to Consider Issuing Digital Dollar.
text: Ivan Malichenko, photo: rtvi