60 percent of the world’s population could shift to Facebook’s Libra.
The world is at a turning point. Financial crisis seems to be rearing its ugly head, trade wars are heating up, and currency crashes are a regular occurrence. In the midst of these economic uncertainties, central banks are making frantic decisions, some on the offense, many in defense.
Central Bank policy, in the modern age, has moved from its traditional ethos of strengthening domestic currency and reducing inflationary pressure, to become a tool to take other countries’ economies hostage. With the digital age in full swing, some countries have even tabled the idea of digital currency, that would replace or work with traditional central bank liabilities, cash, and commercial deposits, in a bid to strengthen, or rather weaponize macro-economic tools.
This stark deviation from the norm of relying on paper-money was not caused by the first mover of the Occidental economies or the innovative tact that often emerges from the Oriental world, it came from the throngs of the free-market, from a private giant. Facebook, with the launch of their cryptocurrency project, Libra, caused several jitters in the market. From other technology giants sniving at a missed opportunity to lawmakers coming out in a more defiant and authoritative manner, the reactions to Libra have been ‘sensitive,’ to say the least.
The concern, however, should not be on the loud outbursts of large economies to Facebook’s Libra, but the quiet undertone adopted by the weaker countries at the prospect of a private company’s creation of a currency that could circumvent their economy.
Dong He, the deputy director of the Monetary and Capital Markets, IMF and Yan Liu, the assistant general counsel at the legal department, IMF, in the UnChained podcast stated that the economic body is concerned about the effect Libra could have on world economies.