Cryptocurrencies Are the Financial Crisis’ “Evil Spawn,” Says ECB Executive

European Central Bank (ECB) executive board member Benoit Coeure has recently revealed he believes cryptocurrencies like bitcoin are the “evil spawn” of the 2008 financial crisis. Per Coeure, bitcoin was an “extremely clever idea,” but not “every clever idea is a good idea.”

Coeure’s words, according to Bloomberg, came as he was speaking at the Bank for International Settlements in Basel. He noted that bitcoin was created in the aftermath of the 2008 financial crisis, and that the cryptocurrency’s creator Satoshi Nakamoto mined the genesis block months after Lehman Brothers went down.

He was quoted as saying:

Few remember that Satoshi embedded the genesis block with a Times headline from January 2009 about U.K. banks’ bailout. In more ways than one, Bitcoin is the evil spawn of the financial crisis.

The ECB executive board member reportedly also reminded his audience that the head of the Bank for International Settlements (BIS), Agustin Carstens, has in the past claimed bitcoin is a “combination of a bubble, a Ponzi scheme, and an environmental disaster.”

As CryptoGlobe covered, Carstens has advised crypto enthusiasts to “stop trying to create money” earlier this year. To the BIS chief, it would be better for them to use their talents on something else.

A report publish by the BIS earlier this year also argued that “cryptocurrencies promise a lot, but they don’t always deliver.” The reported mentioned the high cost of creating decentralized trust, cryptos’ inability to scale while dealing with an increasing number of transactions, and more.

Coeure’s words come shortly after the head of the International Monetary Fund (IMF), Christine Lagarde, claimed banks should “consider launching digital currencies.” While speaking at a conference in Singapore, the former French Minister of Economic Affairs noted blockchain technology is “safe, cheap, and potentially semi-anonymous,” and that central banks should explore the use cases for their own cryptos.

The ECB board members seemingly reacted to the proposal and outlined various experiments that have been done with cryptocurrencies and blockchain technology by financial authorities.

He noted, however, that while most central banks are studying the nascent technology “there is broad agreement that a central bank digital currency, in whatever form, is unlikely to be issued within the next decade.”

Notably back in September the European Commission’s Vice-President Valdis Dombrovskis stated that after changing their views on cryptoassets, the European Union’s finance ministers realized cryptos are “here to stay.”

BBC: Facebook Planning to Launch ‘GlobalCoin’ in Q1 2020

Siamak Masnavi

Social networking giant Facebook is planning to launch its own cryptocurrency (internally dubbed "GlobalCoin") and crypto-powered global payments network (internally called "Project Libra") worldwide by Q1 2020, according to a report published earlier today by BBC News, the world's largest broadcast news organization.

Project Libra's Origin Story

  • 8 May 2018: In a post on Facebook, David Marcus, the former head of Messenger, who was at that time also a board member (since December 2017) of crypto exchange Coinbase, revealed that he was leaving that role to set up a new group focused on exploring applications of blockchain technology across the whole of Facebook.
  • 13 December 2018: Cheddar reported that Facebook’s blockchain group is planning to "potentially disrupt the entire payments industry":

"At a private dinner Facebook hosted during a recent crypto conference, one attendee told Cheddar that Facebook employees pitched the idea of creating a decentralized digital currency for the social network’s 2 billion users."

  • 21 December 2018: Bloomberg reported that Facebook was creating its own cryptocurrency (a stablecoin) for money transfers within its highly popular messaging app WhatsApp.
  • 28 February 2019: The New York Times confirmed Bloomberg's earlier story, and said that, according to its sources, this project was "far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers."
  • 8 April 2019: Nathaniel Popper, one of the two journalists who wrote the report in the New York Times, provided this update (on Twitter) about Facebook's cryptocurrency project:
  • 2 May 2019: The Wall Street Journal reported that Facebook was "recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system," and that the core part of this initiative (code-named "Project Libra") is "a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet." Furthermore, this report said that, according to people familiar, Facebook was talking to "financial institutions including Visa Inc., Mastercard Inc. and payment processor First Data Corp." about investing in this project.
  • 17 May 2019: A report by Reuters said that FinTech company Libra Network was registered in the Republic and Canton of Geneva on May 2. Looking at the entry for Libra Networks, which was published on May 7 in the Swiss Official Gazettte of Commerce (SOGC), tells us:
    • Libra Networks LLC (registration number: CHE193533388) has its registered office in Geneva.
    • According to the English translation, the stated purpose of this company is "provision of services in the fields of finance and technology, as well as the development and production of related software and infrastructure, particularly in connection with investment activities, the payment operation, the financing, identity management, data analysis, big data, blockchain and other technologies."
    • The share capital is CHF 20,000 (100 shares, each with a nominal value of CHF 200); all of the shares are owned by Facebook Global Holdings II, LLC.

Facebook's Stablecoin: GlobalCoin

Here is what we have learnt from the BBC News report:

  • Facebook "is planning to set up a digital payments system in about a dozen countries by the first quarter of 2020."
  • The plan is to start testing the new cryptocurrency (some kind of stablecoin), GlobalCoin, by the end of 2019.
  • Facebook has been getting "advice on operational and regulatory issues" from the UK's central bank governor Mark Carney (whom Facebook founder and CEO Mark Zuckerberg reportedly met in April) and from U.S. Treasury officials.
  • Facebook is also in talks with global remittance firms such as Western Union "as it looks for cheaper and faster ways for people without a bank account to send and receive money."

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