The head of Australia’s central bank Philip Lowe remains skeptical of Facebook’s recently announced digital currency, Libra.
Libra has managed to garner a vast amount of regulatory attention, despite only being officially announced this month. The U.S. Senate has already moved for a hearing to be held next week, with David Marcus, Vice President of Messaging Products at Facebook -- leader of Facebook's cryptocurrency project Calibra -- expected to be in attendance.
Facebook has over 2 billion active users, creating the potential for Libra to become one of the world’s most used currencies upon launch. And of course, central banks around the world are taking notice.
‘Water Under the Bridge’ for Libra
Lowe, who has been Governor of the Australian central bank since 2016, has a history of skepticism towards cryptocurrency. In a Q&A session held on Thursday, June 20, he explained that Facebook’s new currency will fail to live up to the hype,
“There’s a lot of water under the bridge before Facebook’s proposal becomes something we’re using all the time.”
“There are a lot of regulatory issues that need to be addressed and they’ve got to make sure there’s a solid business case, so we’ve got to be careful before we jump to conclusions.”
Lowe has been critical of cryptoassets in the past, taking aim at bitcoin in 2017 when he described the currency as “speculative mania”. He also said at the time that cryptocurrency would be more appealing to criminals than actual customers.
Central Banks Under Fire
Earlier in the week, Bank of England Governor Mark Carney gave his official stance on Facebook’s coin, claiming that it could be important for cross-border transactions. However, Carney warned that the new currency would be held to the highest standard and that the BOE held an “open mind but not an open door” attitude towards Libra.
Central Banks around the world are appearing cautious in their treatment of Libra, and for good reason. Given the reach of Facebook as a global platform, the currency has the potential to disrupt existing fiat institutions--an idea being lauded by members of the cryptocurrency community.
While Facebook's Libra doesn't compete against any open, public, permissionless, borderless, neutral, censorship-resistant blockchains, it *will* compete against both retail banks and central banks. This is going to be fun to watch.— Andreas M. Antonopoulos (@aantonop) June 18, 2019
However, other community members remain frustrated with Facebook’s attempt to portray Libra as a cryptocurrency despite its obvious centralization, including Binance CEO Changpeng Zhao
Facebook Libra coin don't need KYC. They have so much more data on the 2 billion people. Not just name, id, address, phone number. They know your family, friends, real-time/historic location, what you like... They know you more than yourself. And now your wallet too. Best AML!— CZ Binance (@cz_binance) June 18, 2019
Can't wait for a cryptocurrency with the ethics of Uber, the censorship resistance of Paypal, and the centralization of Visa, all tied together under the proven privacy of Facebook. https://t.co/C4FymDjtFw— Sarah Jamie Lewis (@SarahJamieLewis) June 14, 2019
Nonetheless, Libra remains a massive opportunity to increase the exposure of cryptocurrencies to a mainstream audience. It comes as no surprise bitcoin has reached a new high in price for 2019 following the attention generated by Facebook's new coin.