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Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

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Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#21

Post by johnrgrace »

traek wrote: post #8
TheRealPomax wrote: post #6

My main concern about libra is that, by being strongly tied to real currencies, libra issuers (not just facebook, all of them) have effectively assumed the role of unsanctioned mints, with the ability to damage the stability of each currency because libra is not tied to the international exchange system: if you pay facebook, or anyone else, $10 and they convert that into libra, now they have $10 that they will absolu…

This is how every bank works.

Except banking is highly regulated and the money not held in reserves is invested with oversight on how much risk is taken (that oversight fails sometimes but generally works). If a tech company can jump in and function as a bank without oversight that is going to hurt banks.

History has shown us that unregulated banks, and regulated banks that push the limits or evade regulations fail and cause damage to the entire economic system.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#22

Post by buboard »

TheRealPomax wrote: post #16
buboard wrote: post #13

Earlier quoted context omitted.

But i thought each libra must be backed by real money? i.e. when they sell 10 libra the 10 dollars go to the libra fund, and cant really circulate (but can be invested)

But without Facebook (or any of the Libra association members that aren't already financial institutions) starting a bank, and then for obvious reasons being forced by law to split that off from their parent company as an independent entity, why would anyone expect banking laws to apply?

It's not banking laws at all, it is the way they set up the association, I presume precisely to avoid fears like this.

I think there are not clear laws yet about this kind of backed stablecoins. However, their reserve will be 100% , which is way more than any bank.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#23

Post by bilbo0s »

buboard wrote: post #15

Well he should have. Or maybe it's just for show. Libra can be a great tool to control the rising markets in africa. Perhaps this will end with a compromise that gives Fed control over the network.

I don't know man?

There are things happening in Africa right now that make me think FB won't be a major player in Africa in the future. The Africans have been smitten by the Chinese protectionist model. That new free trade agreement they have actually specifically excludes your company from benefiting if you're using goods or services from outside the zone where options exist inside the zone. Don't misunderstand me, I get it, they need to get their economies going. Get jobs for their people. Etc. Just pointing out that this stipulation has some obvious consequences for companies outside the zone.

And it's not just Africa, I'm betting the future will see a balkanization of the internet. I could be wrong though? But I doubt it. A lot of corruption in Africa and everywhere else, and corrupt people are exceedingly greedy. I think we can count on them taking the whole pie wherever possible. As well as aggressively working to expand the number of places it's possible to take the whole pie.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#24

Post by buboard »

bilbo0s wrote: post #23
buboard wrote: post #15

Well he should have. Or maybe it's just for show. Libra can be a great tool to control the rising markets in africa. Perhaps this will end with a compromise that gives Fed control over the network.

I don't know man? There are things happening in Africa right now that make me think FB won't be a major player in Africa in the future. The Africans have been smitten by the Chinese protectionist model. That new free trade agreement they have actually specifically excludes your company from benefiting if you're using goods or services from outside the zone where options exist inside the zone. Don't misunderstand me,…

facebook doesnt have to be in africa for Libra to succeed. Although i think it's pretty popular there anyway. And, no matter how tempting the chinese influence is, the Dollar is still a lot more attractive , and by extension Libra, which is backed by US companies mostly.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#25

Post by buboard »

wil421 wrote: post #10
nostrademons wrote: post #5

Earlier quoted context omitted.

There are several crypto projects (some even fairly popular) where we do know who's behind them - Ripple, Stellar, Ethereum, Tether, Bitcoin Cash, Tron, EOS, etc. Hell, the core dev team members of Bitcoin itself is public knowledge. I think it's interesting that while crypto was a bunch of hobbyists and startups, it was just a bunch of folks wasting their money, but now that FB is involved it's a threat to the globa…

>someone else will come up with a cryptocurrency that's actually useful You named 8 different digital coins. Why aren’t any of them useful? Why do we need other ones?

We are not going to need any of them until we do. People just don't adopt them because wallets are still difficult to use, , they are a nightmare tax-wise and because most banks fear/hate them. But in a world beyond those obstacles, many of them will be useful for different reasons. Some will be safer as long term value stores , others will be fast enough for microtransactions. Considering that exchanging between them is trivial and instant, i think there will be many of them circulating in parallel

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#26

Post by cmiles74 »

TheRealPomax wrote: post #11
DiseasedBadger wrote: post #7

Earlier quoted context omitted.

What about that makes it better to be embargoed by Facebook? That's a dystopia no one needs.

What about Libra is exclusive to Facebook? It's not "their" cryptocurrency, they just pitched the idea. The actual power behind libra is the Libra Association, which has a lot more scary companies participating.

I don't find this at all convincing. I believe Facebook will be managing much of the physical hardware involved, likely in their existing data centers. IMHO, the Libra Association will boil down to Facebook and the payment processors who have signed on. This strikes me as very much Facebook's currency.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#27

Post by redorb »

buboard wrote: post #22
TheRealPomax wrote: post #16

Earlier quoted context omitted.

But without Facebook (or any of the Libra association members that aren't already financial institutions) starting a bank, and then for obvious reasons being forced by law to split that off from their parent company as an independent entity, why would anyone expect banking laws to apply?

It's not banking laws at all, it is the way they set up the association, I presume precisely to avoid fears like this. I think there are not clear laws yet about this kind of backed stablecoins. However, their reserve will be 100% , which is way more than any bank.

I feel like this is E-gold 2.0 maybe 3.0 with BTC being 2.0

https://en.wikipedia.org/wiki/E-gold

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#28

Post by gridlockd »

TheRealPomax wrote: post #6

My main concern about libra is that, by being strongly tied to real currencies, libra issuers (not just facebook, all of them) have effectively assumed the role of unsanctioned mints, with the ability to damage the stability of each currency because libra is not tied to the international exchange system: if you pay facebook, or anyone else, $10 and they convert that into libra, now they have $10 that they will absolu…

The original 10$ aren't "gone", they're held in reserve in the form of bank deposits and government bonds. If you hold Libra, you supposedly have a claim against those.

This is unlike a fractional-reserve bank, which can turn those most of those $10 into loans of any sort and still pretend it's cash that's available at any time.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#29

Post by devoply »

gridlockd wrote: post #28
TheRealPomax wrote: post #6

My main concern about libra is that, by being strongly tied to real currencies, libra issuers (not just facebook, all of them) have effectively assumed the role of unsanctioned mints, with the ability to damage the stability of each currency because libra is not tied to the international exchange system: if you pay facebook, or anyone else, $10 and they convert that into libra, now they have $10 that they will absolu…

The original 10$ aren't "gone", they're held in reserve in the form of bank deposits and government bonds. If you hold Libra, you supposedly have a claim against those. This is unlike a fractional-reserve bank, which can turn those most of those $10 into loans of any sort and still pretend it's cash that's available at any time.

Not just one loan, like 10 loans.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#30

Post by gridlockd »

TheRealPomax wrote: post #16
buboard wrote: post #13

Earlier quoted context omitted.

But i thought each libra must be backed by real money? i.e. when they sell 10 libra the 10 dollars go to the libra fund, and cant really circulate (but can be invested)

But without Facebook (or any of the Libra association members that aren't already financial institutions) starting a bank, and then for obvious reasons being forced by law to split that off from their parent company as an independent entity, why would anyone expect banking laws to apply?

Banking and securities laws affect non-banks too. You can't just act like a bank or issue a security without following the regulations.

Facebook isn't actually acting like a bank, but if they claim that their tokens are backed by real assets when they aren't, that's just plain fraud.

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