People’s Daily Asks if Facebook’s Libra Will Open a Pandora’s Box

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The official newspaper of the Chinese Communist Party has expressed strident concern over Facebook’s plans to launch its own cryptocurrency in the form of Libra.

The People’s Daily opinion piece by Li Zheng (李拯) entitled “Facebook’s Libra – Will it Change the World or Open a Pandora’s Box?” (脸书的Libra:改变世界或打开魔盒) highlights the technical advantages afforded by the new cryptocurrency that Facebook has outlined in a recent white paper.

“Facebook wants to find offline assets to endorse an online digital currency, resolving the problem for prior digital currencies of a lack of credit endorsement.

“[This] thereby removes the large-scale volatility in the value of digital currencies, and enables Libra to fulfil the monetary roles of being a store of value, a unit of account and a medium of exchange.

“It’s obvious that Facebook wants to use this method to resolve the application bottlenecks of digital currencies.”

Li expresses concern about the potential implications of Facebook’s Libra, stating that it will “bring known challenges and risks in many areas, as well as unknown consequences…[we] need to be clearly aware of these.”

“Firstly, Facebook’s release of Libra will bring data privacy problems on a global scale…just three years ago Facebook became embroiled in a data leak scandal involving the US presidential election, and with regard to user data and privacy protection, Facebook’s reputation has always been poor.

“Secondly, Libra will potentially create financial monopoly and regulatory problems…Facebook has nearly 2.4 billion users globally, and based on its user advantage, Facebook’s issuance of Libra is very likely to swiftly create advantages of scale, or even a financial monopoly…who can restrain Facebook from abusing its monopoly position?

“At the same time, how can we be sure that Libra won’t threaten global financial stability while it makes cross-border payments and transactions more convenient?

“Finally, Facebook’s issuance of Libra is likely to reduce the monetary sovereignty of developing nations…for example, the large-scale use of Libra by the citizens of a country for commercial transactions and cross-border payments will necessarily severely reduce the standing of that country’s fiat money, while also interfering with the ability of its central bank to regulate its financial system and execute regular monetary policy.”

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