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ECB Official Warns: Libra Could Be Very Dangerous Without Rules

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ECB Official Warns that Facebook’s Libra crypto project could become very dangerous without having the proper financial regulations in place. As previously reported in the altcoin news here, Libra has been analyzed hundreds of times and still hasn’t got the approval that it is seeking.

Facebook’s motto was to break things and move fast so now regulators across the world are working fast to prevent the tech giant to develop the cryptocurrency into a ‘’regulatory void.’’ The ECB official says that it is ‘’too dangerous’’ for companies such as Facebook to develop these kinds of projects:

‘’It’s out of the question to allow them to develop in a regulatory void for their financial service activities, because it’s just too dangerous. We have to move more quickly than we’ve been able to do up until now.’’

The entire ECB executive board believes that digital currencies will represent the ‘’wake-up call’’ for regulators around the world. He believes that this could result in regulatory entities making improvements in their operations. Facebook’s plan is to launch a digital currency which will trigger central banks and all policymakers across the world. The U.S. congressional committee asked the social media giant to stop the operations regarding Libra. Also, the House Financial Services Committee noted issues that touch the security nature of the cryptocurrency and Facebook’s troubled past regarding data privacy:

‘’Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action.’’

The House Financial Services Committee also warned that if Facebook decides and launches Libra prior to the legislative solutions, the result will be a new ‘’Swiss-based financial system that is too big to fail.’’ The committee also stated that it will further hold public hearings on crypto-related matters next week. As noted in the latest cryptocurrency news, the Reserve Bank Of Australia Governor Philip Lowe indicated there are a lot of regulatory issues regarding Libra. In Asia, the Bank of Japan also warned that Libra poses a huge threat to the current financial systems.

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Vodafone Quits The Facebook Crypto Project Libra Association

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Vodafone quits
Facebook’s Libra lost another vital backer of the project now since Vodafone quits the Libra Association while the central banks from the major economies are forming a coalition to explore state-issued digital currencies and to fight private cryptos so let’s find out more in today’s Libra news.According to BBC, the global Telecom giant Vodafone quits the association making it the latest partner to flee the platform and commenting on the decision to leave the project, one spokesperson of the company revealed:
‘’We have said from the outset that Vodafone’s desire is to make a genuine contribution to extending financial inclusion. We remain fully committed to that goal and feel we can make the most contribution by focusing our efforts on [mobile payments platform] M-Pesa.’’
Vodafone’s reason for leaving Facebook’s Libra crypto project opens up more issues for Libra itself. M-Pesa is now a successful mobile money transmission system that is popular in East and Southern Africa while Safaricom recently signed a deal with California-based global remittance provider Ria money. This deal will enable M-Pesa customers to send payments to more than 20 countries across the globe. Apart from Vodafone, some of the early backers such as PayPal and Mastercard have already quit the Facebook Libra Association and both of the platforms pointed to the growing regulatory pushbacks against the project as the reason for the decision to pull out of the partnership.Back in 2019, the US Senators urged the Libra backers such as Visa and Stripe to leave the project. Despite the criticisms against the project, the Libra Association continued to move forward with the proposed digital currency platform and the developers of the crypto project released a second roadmap with a mainnet testing already underway. Libra is still facing a lot of criticism while countries are moving towards creating their own central bank digital currencies and the banks from Canada, England and Switzerland are now forming a CBDC think tank.The coalition says it will exchange many ideas on how to develop sovereign digital currencies for their respective nations since Australia is also experimenting in the digital payment system that will run on the Ethereum blockchain. China seems to be leading the CBDC race since it has accelerated plans after Libra launched its white paper.
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Libra Stimulated Us To Take CBDCs Seriously: Japanese Banking Veteran

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One Japanese banking veteran known for his previous role as the head of payments and settlements at the Bank of Japan (BOJ) recently said that Facebook's Libra stimulated us to look seriously into digital currency issuance.According to a report by Reuters published on January 22, Hiromi Yamaoka reportedly oversaw the BOJ's research into digital currencies as part of his first role. As he said, he continues to communicate with international central bank policymakers. Currently, Yamaoka is a board member at the IT consultancy firm Future Corp.In the latest cryptocurrencies news today, we also reported that the central banks of Canada, the United Kingdom, Japan, EU, Sweden and Switzerland announced the creation of a group along with the Bank of International Settlements (BIS) to jointly study the concept of central bank digital currencies (CBDC). This is one more proof, according to Yamaoka, that Libra stimulated the markets to study CBDCs even more.Their initiative is symptomatic of increased competition between the public and the private. As such, it is determining the future of money. Yamaoka also noted:
“The latest decision is not just about sharing information. It’s also an effort to keep something like Libra in check [...] Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”
Yamaoka is confident that Libra stimulated the markets and put some pressure on financial institutions to lower the costs of transactions. With this, a lot of fundamental questions about nation states' control over currency issuance were also raised.However, the banking veteran and ex-BOJ official was in the Libra news for saying that central banks may stifle private-sector innovation by using CBDCs to enhance the effectiveness of central bank measures. As he noted:
“In the world of central bankers, the idea of using CBDCs to enhance the effect of monetary policy seems to have subsided somewhat. There are increasing doubts about the effect of negative interest rates as a policy tool. If so, do you want to issue CBDCs for the sake of deploying a policy with questionable effects?”
The expert concluded stating that while Libra stimulated us to see CBDCs in a different light, monetary officials need to be sane in wake of the new changes.
“If you want to make monetary policy effective, you need to ensure people keep using the currency you issue,” he concluded.
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Australia’s APRA Considers Overlooking Facebook’s Calibra

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Australia’s APRA- the Prudential Regulation Authority reportedly considers submitting a framework to oversee the digital wallets that hold huge amounts of value and if approved, this could include Facebook’s controversial stablecoin, Libra and Calibra so let’s find out more in today’s Libra news.Right after the announcement, Facebook’s Libra attracted the attention of the watchdogs again and the social media giant is trying to boost its digital wallet called Calibra which is able to store and move the stabelcoin along. While most of the regulators around the world are going against Facebook’s project, Australia’s APRA could consider Calibra after they published a submission which shows its intent to regulate digital wallets with a lot of amounts of value.APRA believes that technological developments in the financial sector and introducing stablecoins could bring good to the country. It proposes a unified framework where the current and future economic systems can work together:
 “The new framework is intended not only to be fit for purpose for the current financial system but also be able to accommodate future developments and technological advances, such as proposals for global stable coin eco-systems that have been subject to significant attention in recent months. Under this proposal, APRA’s role in the framework would be to oversee wallets that are widely used as a means of payment and store of significant value for a reasonable amount of time.”
Facebook’s Libra could indeed be a stabelcoin backed by real assets but it is not the only digital payment service that is created by large technological companies. Apple Pay, for example, is another type of digital wallet that has now more mass acceptance while APRA decides whether to support this as well. The report informs that because of apple’s product that is already in works with the existing infrastructure run by banks, it could attract a lot lower level of regulatory scrutiny.In addition, the Reserve Bank of Australia doesn’t really believe that the country will need its own central bank digital currency. As per the recent reports, the institution believes that the Australian people already have well-established and regulated digital payment services so they don’t really need a stabelcoin. With Libra’s continuous regulatory problems before the launch, the question remains whether in any other country they will start adopting Libra as a legal form of payment.
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Libra Association Formed Technical Steering Committee

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The Libra Association formed a five-member Technical Steering Committee with the goal of governing the ongoing development of the project so it seems that the platform will not give up on the project as we are reading more in our libra latest news.The goal of the Steering Committee is to oversee and to coordinate the Libra Platform’s technical design and development. The latest announcement by the Libra Association on their website says that the establishment of the Committee is a part of realizing the vision of the project to become ‘’self-governing and independent of any one organization’s control.’’ The Libra Association formed this team after they selected members from 5 out of the 21 companies that were involved with the association in the first place and each has a specific area of technical expertise. The team will be mostly focused on blockchain technology.The co-founder and president at Anchorage Diego Monica, along with Joe Lallouz who is a CEO at bison Trails and Ric Sherves the director of Emerging Technology at Mercy Corps, all have a history with blockchain technology. Nick Grossman, the partner at Union Square Ventures has a background in leading and advising the startups mainly on data, privacy, security, and regulatory issues. George Cabrera is the Core developer at Calibra and has more than 20 years of history in software development, including time spent in Facebook’s Core data team.The responsibilities of the committee will include directing a technical roadmap, forming a few working groups to fast- track the research into the specific problems and guiding the entire codebase development. The announcement showed that within the past quarter of 2020, the Committee will also publish a technical governance framework. This framework will provide a way to how open-source developers can make changes to the Libra network and how they can propose changes as well. The network is now in the pre-mainnet stage according to the roadmap and a full launch is anticipated sometime this year. The Libra 2.0 roadmap includes working more on the mainnet and establishing the criteria for the launch as well as educating the community on contributing more to the project.
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