The Libra Association is in the latest cryptocurrencies news again, this time for holding an inaugural meeting and forming a board based on the meeting’s objective. The location this time was Geneva, Switzerland, where the Libra Association and the entire consortium reaffirmed the interest in creating a payments-oriented stablecoin which would be balanced by a basket of various fiat currencies.
Aside from the explicit interest in the project, the consortium and the 21 members of the Libra Association also formed a five-member board and agreed to interim articles of association which (according to Swiss law) must describe how the organization will be governed.
Most of the major decisions will apparently require a majority vote of the ruling council. However, the proposed changes to membership or management of the reserve must pass by a two-thirds majority, the Libra coin news today show.
What’s interesting is that the five member board features big shots such as Facebook’s David Marcus, representatives from the non-profit Kiva Microfunds, PayU, venture capital firm Andreessen Horowitz as well as execs from Xapo Holdings Limited.
The meeting in Geneva follows series of withdrawals from former consortium members. Earlier today, Booking Holdings (the owner of booking.com, priceline.com, agoda.com and Kayak.com) also withdrew from the Libra Association. This came as another hit in the face for Libra’s consortium which managed to lose partners in the likes of PayPal, Visa, Mastercard, eBay, Stripe and others.
According to reports by Reuters published over the past week, the only remaining payments firm in the Libra Association is the Netherlands-based PayU which does not operate in the United States, Canada and many areas in Africa and the Middle East.
If we round up everything, we can say that there is still some optimism towards Libra and the Libra stablecoin. According to Dante Disparte who is the head of policy and communications at Libra, the recent withdrawal of major backers is “a correction and not a setback.” Disparte also admitted that the coin could face delays due to regulators continuing to scrutinize the project.
Earlier today, the US Treasury Secretary Steven Mnuchin talked about the Libra Association and said that firms left Libra because it was “not up to par” with the American Anti-Money Laundering (AML) standards. He also added that if the project is not compliant when it launches, it could result in action from the Financial Crimes Enforcement Network.
Vodafone Quits The Facebook Crypto Project Libra Association
‘’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.
Libra Stimulated Us To Take CBDCs Seriously: Japanese Banking Veteran
“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.
Australia’s APRA Considers Overlooking Facebook’s Calibra
“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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