The Senate Banking Chair in the US had scheduled a meeting with the executive of Facebook to question about Libra for 16th July 2019. Reportedly, Marcus David, the Head of the Libra Association, will be representing the Tech Giant’s plans.
David has shared the written testimony on the government website where he diligently explains the development and the plans with Libra. Moreover, Marcus David was also the President of one of the largest payment network in the world, PayPal. In the beginning, he revisits this fact and association with Facebook to further converge on the issue.
On Libra, he emphasized the utility of the payment system and its viability. He wrote,
Libra is about developing a safe, secure, and low-cost way for people to move money efficiently around the world. He also added, “In fact, I expect that this will be the broadest, most extensive, and most careful pre-launch oversight by regulators and central banks in FinTech’s history.”
He mentioned that Libra would work with the Governments and that “monetary policy is properly the province of central banks.” Nevertheless, the structure proposed by him mimics that of a central bank. It involves a Libra Reserve and a Libra Association, and the transactions would be conducted on the blockchain. He said,
Libra brings together attributes of the world’s best currencies: stability, low inflation, wide usability, and fungibility.
However, he emphasized that the fact that Libra would not compete with the functions of the sovereign Central Banks in any country. While a basket of currencies will back Libra, the Reserve will be distributed all around the world. Regulated custodians will hold the reserves in specific geographical locations. He wrote,
The assets in the Libra Reserve will be held by a geographically distributed network of regulated custodians with investment-grade credit ratings to provide high auditability.
On the regulatory front, it is currently being governed by FINMA in Switzerland and is registered as a money service business. Moreover, the Non-Government Organisation plans to gain appropriate regulatory license and approval from all countries it will operate in.
Gabor Gubacs, the CEO at VanEck tweeted,
#Libra / David Marcus’ written Senate testimony is published. Quick-take:
+ “Libra is a payment tool, not an investment.”
+ Functions as an NGO. + Regulator: Switzerland/FINMA.
+ Compliance: OFAC
+ registered as money services business
Last but not least, the announcement laid the foundation of an innovative system that has a lot of potential in improving the Financial Services Industry. Moreover, it also began the probation period, where healthy engagement with the Authorities around the world will help bring the plan to fruition.
Do you think that the Authorities will consider the testimony to continue its crackdown? Please share your views with us.