6.9 C
Manchester
September 21, 2020
Image default
Bitcoin

According to the money historian, “Libra will never see the light of day.” Blocksats

Professor of the University of California, Berkeley – Barry Eichengreen claims that the Facebook stablecoin Libra planned by Facebook is facing too many “unsolvable” problems and too much resistance from governments to run.

“Libra is an interesting idea that will never see the light of day.”

He said on Unitize conferences 10th of July.

Eichengreen says the stablecoin sector is largely ignorant of monetary economics and history. He said his economic work resulted in invitations “for a series of dinners at excellent San Francisco restaurants with the founders and founders of future stablecoins.”

“My conclusion was that my lunch companions knew everything about blockchain, but they didn’t know much about monetary economics.”

– said Eichengreen, emphasizing that the creators of Stablecoins were not aware of earlier speculative attacks on fixed exchange rates.

Eichengreen added:

“Stablecoins are either fragile – they are prone to attacks and collapse if they are only partially secured by real dollars or dollar bank balances, or they are excessively expensive to expand, if they are actually fully or overly secured.”

Stablecoin supporters are naive

While many analysts believe Libra may disrupt the existing financial system, Eichengreen disagrees and points out that, despite the publication of a second white paper this year, Facebook’s “stablecoin” is still affected by “insoluble” challenges.

The historian said there were fears that Libra would “undermine the effectiveness of domestic monetary policy” in both emerging and developed countries. Citizens of countries with volatile fiduciary currencies may choose to abandon their local money in favor of the globally accepted Libra dollar.

According to Eichengreen, Libra’s excessive support and security for its token will be provided through transaction fees. However, because high fees discourage adoption, the professor predicts that “fees will be kept low, which raises questions about the adequacy of the capital buffer.”

Libra Central Bank?

The economist also claims that “Libra will need a central bank if the markets that grow around it are stable”, referring to the projected increase in the number of derivatives related to stablecoins.

“National governments will have concerns about the creation of a private, Facebook owned and managed central bank.”

– added.

“So I think there are very big fears that need to be resolved for Libra to move, and my conclusion is that some of these problems are insoluble.”

Related posts

USDC Now Processes 1000 TPS With Zero Charges |

Aparnna Hajirnis

The price of bitcoin is falling but this is not the end of cryptocurrency increases

Aparnna Hajirnis

57.5% of Lebanese prefer to receive their monthly salary in Bitcoin than in fiat currency

Anupreet Kaur

Leave a Comment