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I wrote a piece for the New York Times on why Facebook's global currency is ridiculous. nytimes.com/2019/06/19/opi…
1. This new FB-led global payments system Libra is a private currency run by a corporate council of Uber, Facebook, VISA, Mastercard, etc out of a Swiss nonprofit. They even set up something called the "Libra Reserve," like a private Federal Reserve. nytimes.com/2019/06/19/opi…
2. As part of this new arrangement, Facebook is starting a subsidiary to offer financial services, digital wallets, payments, savings, etc.
3. There are four problems off the top with Facebook's global currency. First, bank compliance for counterfeiting, fraud, terrorism, privacy laws, etc is hard and complex. Facebook is bad at complying with laws and protecting privacy. nytimes.com/2019/06/19/opi…
4. Two, we separate out banking/payments from commerce so banks don't compete with their customers. FB's new subsidiary destroys that separation, and would allow FB to see into every commercial transaction and use that data to serve itself. That. Is Crazy. nytimes.com/2019/06/19/opi…
5. Three, a new currency introduces a need for bailouts. While Libra will be privately governed, to the extent it succeeds there will be a need to prevent panics if something goes wrong. Who will do that? If Libra becomes Too Big to Fail, the answer is you and me.
6. Finally, this new global currency undermines sovereignty. Maybe you like or maybe you don't like U.S. sanctions regimes, but do we want techbros in Geneva determining whether sanctions work against North Korea? I didn't think so. nytimes.com/2019/06/19/opi…
7. My general response to Libra is a as big an eye roll as I can manage. Facebook is too big and powerful and Mark Zuckerberg has learned nothing. Break it up already. nytimes.com/2019/06/19/opi…
