Altcoin News: US Banks Fear the Emergence of a Shadow Financial System Based on Libra
October 2, 2019, by Marko Vidrih on ALTCOIN MAGAZINE
The US Federal Reserve turned to the largest banks in the country with a request to share their views on Facebook’s stablecoin project and found out that they were not particularly enthusiastic about it, Bloomberg writes.
“Facebook is potentially creating a digital monetary ecosystem outside of sanctioned financial markets — or a ‘shadow banking’ system,” banks said, according to minutes of this month’s Federal Advisory Council meeting. “As consumers adopt Libra, more deposits could migrate onto the platform, effectively reducing liquidity, and that disintermediation may further expand into loan and investment services.”
The leaders of the twelve banks that make up the Federal Advisory Council pointed out the many risks of Libra and similar stablecoins, including a possible decrease in the demand for deposit accounts and bank payments, as well as “challenges for the banking business model.” In addition, bankers believe that the Facebook initiative can influence the national monetary policy and “limit the ability to monitor, manage and influence the local economies.”
A similar opinion in a separate statement, expressed the European Commissioner for Competition Margrethe Vestager noting that Libra can lead to the formation of a new, completely independent economy.
“It’s a new thing that we’ve begun to ask questions about something that doesn’t yet exist. But it’s because we want to be far enough ahead that we can say whether this will be a problem,” said Vestager.
Author: Marko Vidrih
