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France and Germany Agree to Block Facebook's Libra

reuters.com

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

#661

Post by mikhailfranco »

insulanus wrote: post #635
AdrianB1 wrote: post #410

Earlier quoted context omitted.

See Montenegro, the country that has no own currency, but uses Euro: they have no particular problems because of this.

Montenegro has a population of about 600K. Its annual GDP is $12 billion. There are also small countries that are pegged to the US dollar. When you are a small-potatoes nation-state, and have a non-diversified or small economy, it is a great idea to use a larger, better established, currency. * It's more stable * Trade is easier * More than 3 banks accept your currency! The incentives of the nations controlling the e…

Also Ecuador uses the USD, with a GDP of ~$100bn.

There's a big difference between having a currency pegged to another, and not actually having a currency at all, and using physical foreign currency for everyday transactions.

Pegs can be broken and may be hedged with FX futures.

The second situation is a much stronger existential commitment, which makes it more reliable and predictable. Reinventing a new national currency is a high barrier, which cannot be hedged directly in the FX markets (although sovereign CDS might be close enough).

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

#662

Post by jillesvangurp »

r3trohack3r wrote: post #397
jillesvangurp wrote: post #275

Earlier quoted context omitted.

Maybe but I'm just making the point that Facebook has plenty of ways to use most or all of what they announced regarding Libra to basically meet their stated goal of providing a wallet feature to users that would basically amount to them doing very similar/identical things as other companies already do and would be quite hard to ban for that same reason. The reason I bring up payment solutions is because that is lite…

This sounds suspiciously like the “we are too smart for you to regulate us” argument. When reading a lot of these arguments, a lot of them seem to me to be very “white box” defending the end result against legislation by arguing about the internal implementation. Facebook is creating a financial instrument. I’m a bit surprised regulators couldn’t use _existing_ legislation to prevent them from using it in a country.

Facebook is creating a technical platform very similar to other platforms already in use that enables many things; most of which are neither new nor illegal.

The financial instrument part of it is getting all the attention here even though it's hardly essential to Libra (the platform as a whole). That too is not new and they'd have to apply existing legislation in a way that is consistent with how they are already applying it.

That's the key point. Failing to do that would create a lot of problems; which automatically translates into court cases and judges deciding on what is the correct way to do this rather than politicians. That will take many years. Existing legislation is the only legislation that matters because creating new laws or emergency laws would be very hard; especially considering that nobody seems to agree on what should actually be in those laws.

So we're getting a vague "we don't like that sort of thing" in response to a deliberately vague press release a few months ago that wasn't being very specific on a lot of things. It's a political statement not actually backed up by concrete plans to change legislation or instruct authorities to interpret it in a certain way. It's a hollow threat.

Of course you have to see this in the context of the bigger picture of tax dodging and privacy violations associated with big US tech companies operating in Europe and the public pressure to do something about that. That's what this is. Political posturing.

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

#663

Post by bubble_talk »

I for one welcome Libra, but only for exactly one purpose.

The next time governments bail out another bank, they should just hand them a zillions Libras and ask the banks to collect the actual money from Facebook when they need it. Don't know if that is technically possible, but I would certainly support such a bailout scheme. :-)

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

#664

Post by afiori »

nugget wrote: post #575
dpau wrote: post #419

Earlier quoted context omitted.

Last week I wanted to purchase a used item but discovered that, without warning or notification, Marketplace was deactivated from my Facebook account. My Facebook account is quite active, with posts, discussion in multiple groups, and hundreds of friends. I still have no clue as to what rule I triggered and no recourse to reactivate it. Now imagine that's my digital Libra bank account? No thanks.

Isn't the answer better consumer protections, though? Rather than a ban on new technology that threatens the status quo. If Facebook wants to be a bank, they should be subject to the banking regulators and there could be (should be) strong consumer protections preventing the type of corporate behavior you describe.

The point is that not even a German bank would be allowed to do what Facebook plans to do.

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

#665

Post by afiori »

smsm42 wrote: post #550
WhoBeI wrote: post #522

Earlier quoted context omitted.

I was hoping this would happen. It will probably become a EU thing now. The idea of a privately controlled currency needs to die quickly. Never been a fan of crypto currency in general but Bitcoin, and the like, are accepted because they are not centralized. Your Bitcoin won't change in value or disappear because your country and another get in a fight.

There are lots of privately controlled currencies. Miles, points, certificates, game gold, etc. - they are all private currencies. Most of them aren't legal tender, but neither are cryptocurrencies. The only difference between facebook-coin and miles is that Facebook promises to encourage dealing in their coin and airline would frown on that. Not much difference otherwise. You have some tokens that you can exchange f…

The difference is that those other are not meant to be used as a money replacement. In Pokemon Go there are coins and they are nothing but points to spend in store.

If I could transfer them to other player, become a certified shop that accept payment with them, or do any of the many other thing you can do with money that would be probably a legally grey area.

(moreover I am not sure how you would tax such a currency)

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

#666

Post by w1nst0nsm1th »

powerapple wrote: post #659
blackbrokkoli wrote: post #225

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…

Is it just another kind of foreign currency, not controlled by German government. The reason why bitcoin is popular is that people believe governments and central banks cannot be trusted, and they are evil anyway. I understand why the governments do this, because they fear losing control.

That's for the theory. In practice, Bitcoin is popular because it allow you to speculate on an instrument easy to manipulate if you have enough funding and because it allows you to buy drugs on dark markets. Beside that, due to the volatity of Bitcoin, it has no practical use.

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

#667

Post by mosselman »

np_tedious wrote: post #626
mosselman wrote: post #322

Earlier quoted context omitted.

So people or governments are not allowed to make mistakes and learn from them? If, apparently, something likewise happened in the past and caused lots of problems, the German government should just let it happen now just so that it isn't 'ironic'? Not to mention the fact that the German government around the second world war was completely different from the current German government in terms of the actual people mak…

But this behavior is not an example of learning. In fact, as Libra could potentially limits government power and encourages sound money money, one could argue this is the opposite of the dangers you mentioned. This false equivalence borders on Godwin's law. Combine that with the 9/11 rhetoric in the US hearings and it's really quite telling how they get SO scared. Idk how far it's going to go, and it might not be Lib…

Well it seems like the German government is worried about Facebook controlling money, not cryptocurrency per se. And I completely agree with that. Facebook creating money and everyone switching to libra sounds very dystopian to me.

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

#668

Post by rolltiide »

dmoy wrote: post #651
rolltiide wrote: post #321

Earlier quoted context omitted.

The foundation and validators have various ways of making a return The users do not.

Sure but how is that an investment return? Usually when you hear "take a portion of the investment returns" you're thinking expense ratios, some small fraction of the returns that the user is getting. If the user gets no additional returns, then it's just a fee, no?

Validators pay $10,000,000 for the privilege of processing transactions and collect transaction fees and can probably resale that privilege with a premium based on their absolute return, which would be called yield. They buy originally from the foundation, and thats how the foundation makes its first $1,000,000,000 dollars. These validators and other accredited investors also get access to a completely parallel asset called LIT, Libra Investment Token, which has value based on typical securities fundamentals.

The users get the stablecoin and are resigned to only possibly trying to speculate on foreign exchange rate changes, which are entirely inferior to the other opportunities such that it shouldn't even be considered. Users only have the opportunity to be users.

Probably time to read the white paper again if you really want to have a more nuanced discussion.

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

#669

Post by Erlich_Bachman »

javert wrote: post #355
Erlich_Bachman wrote: post #237

Earlier quoted context omitted.

It's a pretty obvious term. Obvious in the way that it includes Libra (where Facebook is a private entity), and excludes something like Bitcoin which is not directly controlled by any such entity.

No, it's not obvious what it means. In everyday English, it would be obvious, but regulators and politicians are not bound by that. "It's obvious" is rarely a good argument on this particular site. If it were obvious we wouldn't be talking about it.

"Private entity" is more of a legal term than anything else (than common english). That's is exactly why it's obvious, because it is used in an official document, which is not likely to use the common english definitions and use more legal ones.

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

#670

Post by Matumio »

bko wrote: post #366
jayd16 wrote: post #346

Earlier quoted context omitted.

Then create a bank. But that's not what this is. They want to make a bank that prints its own currency and skips the paperwork needed for current monetary exchange. It's just as OP has said.

Banks don't follow full reserve banking. They follow fractional reserve banking. When you put 1 Euro in the bank, they have discretion as to how to invest this amount and only need to keep a fraction of your money in reserves. With a bank I'm also stuck being exposed to the currency of my account. And European banks often have fees or minimum balances. Libra offers benefits to banks and is safer. [edit] The idea of a…

> When you put 1 Euro in the bank, they have discretion as to how to invest this amount and only need to keep a fraction of your money in reserves.

That's... misleading? When you put 1 Euro into the bank, it allows them to hand out credits (promises) of 20 Euro. They don't just loan out what you paid in. They create their own money.

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