Facebook is garnering more opposition.
Nobel Prize-winning economist Joseph Stiglitz believes only a fool would trust Facebook with their money.
According to Stiglitz, the main complaint regarding traditional currencies has been instability; however, major national currencies have long been “remarkably stable.”
He also believes that the banking sector has fostered considerable financial transparency and it has made “it more difficult for the banking system to be used to launder money and for other nefarious activities.” Since he believes technology already allows for fast transactions, he mainly sees Libra as a medium to circumvent regulations and anti money-laundering policies.
“The last thing we need is a new vehicle for nurturing illicit activities and laundering the proceeds, which another cryptocurrency will almost certainly turn out to be,” Stiglitz writes.
He identifies the main problem of the banking sector as the lack of competition, especially in the case of the U.S. banks. Stiglitz believes to counter it, American regulators should step in.
He sees “deposits” as a possible source of revenue for Libra if Libra paid no interest on them. He also raises the question of taxes which should be paid whenever a transaction occurs and the cryptocurrency is exchanged back to fiat.
He sees two possible business models for Libra—endorsing illegal activities or mining the data Libra transactions provide. The former option requires immediate shutdown, Stiglitz writes, while the latter impacts negatively on the consumer’s security and privacy.
“[I]n just a few short years, Facebook has earned a level of distrust that took the banking sector much longer to achieve. Time and again, Facebook’s leaders, faced with a choice between money and honoring their promises, have grabbed the money. And nothing could be more about money than creating a new currency,” Stiglitz concludes.