- In a hearing held yesterday, Mark Zuckerberg highlighted the benefits of using the digital currency Libra for politics and the United States of America.
- Nevertheless, it received little support from the US Congress. Other experts, such as Ripple’s CEO, also criticized the project.
Facebook announced in the middle of the year that it would launch its own digital currency, whose currency basket would consist of several Fiat currencies. However, the project met with fierce resistance from the crypto scene as well as from politicians worldwide and the population. Yesterday, the CEO of Facebook, Mark Zuckerberg, addressed the US Congress for the second time and tried to convince its members of the benefits of Libra.
Zuckerberg receives little encouragement and meets with great skepticism
One point of criticism that was raised in advance was that Libra could undermine traditional fiat currencies such as the USD and thus make central banks superfluous. Libra would reach more than 2 billion people worldwide, giving Facebook tons of data that it could use to further process and optimize its ads. Zuckerberg explained this at the hearing:
I want to be clear: this is not an attempt to create a sovereign currency Die Monetary policy is a matter for the central banks and not for Libra.
Zuckerberg further stated that Libra will exist and interact completely independently of Facebook. The Calibra digital wallet, which manages the Libra digital currency, will guarantee strong protection and privacy for all users. The financial data will be processed separately by Facebook and will not be passed on at any time.
Nevertheless, many companies, such as Mastercard, Paypal or Stripe, have left the project with the remark that they have concerns about the privacy and data protection of their customers. The situation was aggravated by the fact that two congressmen sent letters to the board members of the companies and clearly advised against further cooperation.
To convince the Congress, Zuckerberg emphasized the benefits of using Libra for America, the people and the country’s supremacy worldwide:
Libra is mainly supported by dollars, and I believe it will strengthen America’s financial leadership as well as our democratic values and oversight around the world. If America is not innovative, our financial leadership is not guaranteed.
He also points out that China wants to bring the digital yuan onto the market in a few months and that America is years ahead. Regardless of the fact that Congress is currently very reluctant towards Libra, Congress believes that cryptocurrencies remain at the heart of money laundering and terrorist financing. However, a recent study (100 pages long), released by the German Federal Ministry of Finance, suggests, that this assertion is largely incorrect.
In summary it can be stated that the skepticism still exists and Zuckerberg has a lot of work ahead of him. Also in the crypto market there are critical voices, which have little positive words for Libra.
Ripple CEO sees biggest problem in missing confidence
Brad Garlinghouse, CEO of Ripple, agrees with Libra’s vision to develop a global payment system that everyone can use, whether rich or poor. However, the project lacks a fundamental foundation of trust that is vital to financial services. Garlinghouse explained this in an interview with Fox News (freely translated):
How they got here and whether or not it’s fair, the reality is, and they acknowledge it, there’s a trust deficit. And I think for any financial service, you have to have that foundation of trust. So I think the timing is interesting to see Facebook lead on this. I thought another interesting nugget of Mark Zuckerberg’s testimony was that they’re helping America’s leadership. Yet they set Libra up in Switzerland.
The whole interview can be watched here:
Always a good time chatting with @MariaBartiromo – while others in crypto are moving overseas, Ripple is committed to working proactively with US regulators on blockchain/crypto. We just opened an office in DC, and we're here for the long haul https://t.co/kJFoscVDZf
— Brad Garlinghouse (@bgarlinghouse) October 23, 2019