At a banking seminar, David Marcus, yesterday proposed a plan to issue a series of stablecoins instead of a combined one. Marcus is optimistic of a launch by June 2020.
Facebook’s announcement of Libra has unsettled financial regulators all over the world. The userbase of Facebook poses a threat to the power of central banks in the world. Moreover, the nature of the “currency” backed by a combination of assets makes it sound like an ETF or a mutual fund.
These concerns were raised all over the world, including a two separate US Senate house meeting with David Marcus and the SEC. Currently, the Senate awaits Mark Zuckerberg’s testimony on the project. Until then, the project is halted for launch.
Nevertheless, David Marcus told the panel that Libra’s mission to provide an ‘efficient payment system’ is still intact. Hence, instead of introducing a new currency or asset, they will present a series of stablecoins pegged to individual FIAT.
David Marcus told the panel,
“We could do it differently, instead of having a synthetic unit… we could have a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stable coin, etc,”
This is a tried and tested method working quite efficiently. Tether, Circle, TrueUSD, and so on are leading the pack currently. Stablecoins backed by USD, Yen, Yuan, Euro, and even Turkish Lira have been introduced for seamless trading.
However, the global regulators are planning to place hurdles before stablecoins as well. Recently, the G7 Task Force released a report underlining the threats of stablecoins. The launch and operation of current stablecoins could face strict restrictions soon.
Nevertheless, while acknowledging the regulatory pressures, David Marcus is still optimistic about a 2020 launch. He told the media,
“We’ll see. That’s still the goal,” he added “We’ve always said that we wouldn’t go forward unless we have addressed all legitimate concerns and get proper regulatory approval. So it’s not entirely up to us,”
It seems like global authorities are trying their best to retain their economic powers. Moreover, Facebook’s history with data control is tainted. Hence, the regulators are refraining from providing monetary authority to it.
Do you think Libra will be successful with this approach? Please share your views with us.