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France and Germany Agree to Block Facebook's Libra

reuters.com

261–270 of 821 posts

Re: France and Germany Agree to Block Facebook's Libra

#261
post #27

> “no private entity can claim monetary power, which is inherent to the sovereignty of nations” What a bizarre statement. Providing for security is also inherent to sovereignty of nations, but private security firms flourish. It's also odd in the context of Germany in particular where a private currency has been used for many years: https://en.wikipedia.org/wiki/Chiemgauer I suspect there's a lot more behind this sta…

> It's also odd in the context of Germany

It isn't. Only the Bundesbank / ECB is allowed to provide a currency in for Germany.

https://de.wikipedia.org/wiki/Währungsmonopol

The Chiemgauer is a regional voucher system - more comparable to regional loyalty programs or frequent-flyer programs.

Re: France and Germany Agree to Block Facebook's Libra

#262
post #200
post #125

Earlier quoted context omitted.

Presumably, Facebook calling Libra "the Libra voucher system" wouldn't quite fix it though.

Yes - you have to be a member of the Chiemgauer e.V. association in order to use or accept the vouchers, which is why it's called "vereinsintern", i.e. "internal to the association". It's not a general-purpose currency.

Have to? What happens if a random business accepts them for payment, and uses them for purchases at other accepting businesses?

Re: France and Germany Agree to Block Facebook's Libra

#263
post #90

I dislike Facebook but I kind of feel sorry for them now because any ambitious thing that they'll attempt will probably be blocked by governments now. Facebook and Zuckerberg deserves it though.

I don't. They couldn't even manage and maintain an internal currency, why is this suddenly a better idea 6 years down the road, done on an ambitious scale that threatens real currencies? It's a company, there will be other companies with ambitious efforts.

[0] https://techcrunch.com/2013/09/12/goodbye-facebook-credit/

Re: France and Germany Agree to Block Facebook's Libra

#264

nations also used to be convinced it is inherent to their sovereignty to tell us who to worship and who to marry. this is no longer the case. not sure there is a principled reason why the power to govern the exchange of goods and services (which is what money facilitates) should be up to them.

Taxes are inherently in the domain of the state, and to do that you need to mandate how accounting and payment of taxes work.

That really needs a standardized currency.

Re: France and Germany Agree to Block Facebook's Libra

#265

I'm of course not familiar with the specific mindsets and the history of this decision, but I want to share a bit of cultural perspective from Germany that is so far not really considered in this comment section: Germany is very, very keen on preventing powerful entities from acting outside of regulation and similarly, if not more, on preventing a single entity to get in control of everything. This is largely due to…

> Hey do you mind if we just skip the paperwork part and just control currency, while actually being a social media tech giant

This is a gross mischaracterization of what Libra is. Libra is a token that's backed 1 to 1 on some basket of currencies and mostly government bonds. The Libra foundation makes money by taking a portion of the investment return to fund themselves, much like a brokerage takes a bit of the return when they invest your cash account. Thats it.

Re: France and Germany Agree to Block Facebook's Libra

#266

Earlier quoted context omitted.

[flagged]

Think this is less about liberalism (it doesn't argue for government to be run like a business) and more about US-inspired thinking where businesses are better than governments.

Which, to be clear, is an idea that I detest.

But governments do hate competition.

Re: France and Germany Agree to Block Facebook's Libra

#267
post #27

> “no private entity can claim monetary power, which is inherent to the sovereignty of nations” What a bizarre statement. Providing for security is also inherent to sovereignty of nations, but private security firms flourish. It's also odd in the context of Germany in particular where a private currency has been used for many years: https://en.wikipedia.org/wiki/Chiemgauer I suspect there's a lot more behind this sta…

> This conflict means that, no matter how well intentioned, policy makers will be feel compelled to devalue their own currencies. It's a race to the bottom, but without a bottom. Alternatives, especially private alternatives readily available to citizens, will increasingly be viewed as the enemy.

The ability to devalue their currency is an essential tool that central banks wield to battle financial crises.

Keynes pointed out that workers don't want to take a pay cut (and employers don't want to offer a pay cut, because they fear causing resentment), so nominal wages are "sticky." When they need to fall to reach price equilibrium, the economy tends to experience mass unemployment instead. It would be very difficult to convince all workers universally to accept a pay cut. The alternative is to devalue the currency so everyone is affected through the currency rather than by trying to propagate policy changes throughout the private sector.

Also, countries can have huge problems when they take on debts in a hard currency which they can't devalue. This is how you get runaway hyperinflation. Their revenues are in the local currency, but their debts are in (usually) USD. If they run low on foreign currency reserves, they can be forced to sell huge amounts of the local currency on the forex market in order to acquire sufficient USD to pay their debts. I can see why France and Germany wouldn't be eager to see yet another USD rise to prominence and leave them disadvantaged in debt financing.

Another talking point which comes up all of the time is the tension introduced when different regions (like Germany and Greece) are forced to use the same currency, even though normally economic forces would cause the weaker region's currency to move against the stronger one's. Devaluation would be fantastic for Greece but it's hobbled by crushingly expensive exports since it's in the Euro monetary union.

Re: France and Germany Agree to Block Facebook's Libra

#268

I'm of course not familiar with the specific mindsets and the history of this decision, but I want to share a bit of cultural perspective from Germany that is so far not really considered in this comment section: Germany is very, very keen on preventing powerful entities from acting outside of regulation and similarly, if not more, on preventing a single entity to get in control of everything. This is largely due to…

> not familiar with the specific mindsets and the history of this decision

I think Monsieur Macron has put this onto the agenda when Libra was announced. I'm not disagreeing with the decision and have similar concerns as you, but I'm still uncertain whether the state should even have the ability to block these and other things in general. Most of all, I miss a British voice here (as, sadly, not very much longer an EU member), and see this as a preview for where things are going with France getting more weight as the UK is leaving.

Re: France and Germany Agree to Block Facebook's Libra

#269
post #243

Earlier quoted context omitted.

Ironic that the German government wants to avoid irresponsible monetary policy through a private entity when it is literally printing money to stimulate growth through the ECB.

Monetary and fiscal policy is not the same as us balancing a checkbook at the end of the month. Money is created over time for many reasons, on a micro scale for stimulus, and on a macro scale because the economy grows over time and money represents a slice of economic activity. Keeping it from going up and giving disproportionate gains to money holders past is part of the job. There's nothing ironic about it, this i…

>Keeping it from going up and giving disproportionate gains to money holders past is part of the job. There's nothing ironic about it, this is the job of central banks, and there's nothing shady about it.

There is something incredibly shady about it, because inflationary monetary policy is inherently a regressionary redistribution of purchasing power and wealth due to Cantillon effects whereby those relatively closer to the printing press (governments, banks, and asset holders in roughly that order) gain a higher purchasing power than those at the very end of the chain which has traditionally been wage-earners and average workers.

There is no need to print money in a growing economy, it's purely ideology from the Keynesian economic establishment where they've somehow convinced the general public that it is crucial to have a steady inflation in an economy because otherwise people won't spend money or invest (which is a priori false, as time preference is a thing in both humans and firms). For thousands of years gold has been used as a monetary backing (which is deflationary by definition), and some of the highest recorded levels of economic growth in history has generally been slightly deflationary (the United States during the 1800s is a prime example).

Re: France and Germany Agree to Block Facebook's Libra

#270

I'm of course not familiar with the specific mindsets and the history of this decision, but I want to share a bit of cultural perspective from Germany that is so far not really considered in this comment section: Germany is very, very keen on preventing powerful entities from acting outside of regulation and similarly, if not more, on preventing a single entity to get in control of everything. This is largely due to…

That’s a very typical German mindset. You implicitly assume that nothing good can come out of Libra so it should be banned from the beginning. The pragmatic approach is to wait and see what happens. Most likely, it won’t be as successful as you assume it will be. Also, there are plenty of other forms of private money out there that you don’t seem to have a problem with (e.g. credit cards), as well as foreign currencies. Why do you think using Russian rubles for payments should be perfectly legal but using Libra for payments is completely evil? It does not make much sense to me.
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