The Monetary Authority of Singapore (MAS) has become the latest central bank to voice concerns over Facebook’s Libra cryptocurrency and said on Thursday, June 27, it was in talks with the social network group.
Bloomberg reported that MAS managing director Ravi Menon expressed concerns at Thursday’s media briefing about the way Libra would function, but also noted the potential benefits, saying current cross-border payment were “expensive, inefficient and sometimes risky”.
He said that Libra offered an “interesting proposition” that could help address such issues.
More Information Needed
Menon added, however, that more information was needed before the MAS could accurately assess the potential benefits or possible risks. The key challenge was to “figure out the nature of the beast”.
What is it more like and which box we can put it into? At this point it’s not clear whether it offers a distinctly superior proposition to existing electronic payment mechanisms. We need to understand how exactly it’s going to work.
Menon’s comments added to a growing chorus of concerns among central bankers, regulators and government officials regarding the launch of the Libra cryptocurrency by Facebook and its 27 corporate partners.
Many are concerned that given Facebook’s international clout, and that of many of its partners – which include PayPal, Visa and Mastercard – Libra could become so popular that it could threaten the stability of sovereign currencies.
G7 Task Force
France’s central bank governor, Francois Villeroy de Galhau said on Friday, June 21, that he was urging the G7 to establish a task force to research the potential negative impacts of such a large multinational cartel setting up its own currency.
Villeroy was echoing concerns expressed by his country’s economic minister Bruno Le Maire earlier in the week. Le Maire said he would be demanding guarantees from Facebook that its Libra project must never try to act as a rival to sovereign currencies.
Similarly, Bank of England governor Mark Carney urged caution, saying Libra could be systemically significant and that it must be held up to the highest standards of regulatory scrutiny.
Central bankers, regulators and government officials from Russia, the US and Australia – among others – have weighed in on the topic, as have top economists and academics such as Nouriel Roubini and Joseph Stiglitz.
They are also worried that a cryptocurrency such as Libra could be used for money laundering purposes and other criminal activity. Many also expressed the potential cyber-security dangers of a company such as Facebook – which already has a vast database of personal details about its millions of users – obtaining their financial details too.
Sherrod Brown, US senator for Ohio and a member of the Senate Banking Committee was among the most forthright when he said:
We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.