The official testimony and hearing of the Facebook CEO, Mark Zuckerberg, took place yesterday – when the Financial Services Committee questioned the head of the social media giant for over six hours. However, after this has passed, it seems like the Congress hates Libra and its planned token. We could conclude this by seeing how the hearing expanded to touch on a wide range of concerns and controversies that are surrounding Facebook.
The hearing was also contentious and several members of the Congress used their allotted five minutes of questioning to rail against Zuckerberg – rather than asking him a single question. Warren Davidson was one of the Congressmen who was featured in the Libra coin news today for stating:
“I don’t think day-to-day at his company he gets treated that way very often. There are people who have frankly been pretty rude.”
As we can see, the hearing saw little change from the Head of Calibra David Marcus and his appearances before the House and the Senate in July. If anything, this hearing was distinct in the way through which the committee members felt freer to take Zuckerberg to task for Facebook and its historic transgressions than they had with Marcus who is relatively new to the organization.
The Congress hates Libra even after the announcement which came from Zuckerberg himself. The Facebook CEO and his opening remarks were published on October 22, when he committed to Facebook not launching Libra anywhere in the world without all the appropriate US regulators.
The Representative Bill Huizenga (R-MI) sought to clarify the relationship between Facebook and the Libra Association. During his line of questions, the congressman asked what Facebook response would be if the Libra Association insists on launching without American regulatory approach. Zuckerberg was confident and said “Then I believe that we would be forced to leave the association.”
The answer was very striking knowing that Facebook has a central role in forming the Libra Association. However, many said that the Congress hates Libra. This was proved when Representative Warren Davidson said:
“Frankly, $10 million to Facebook is a rounding error.Think about it as a fiduciary responsibility to the value of Facebook. If Facebook is domiciled in the U.S. and they are going to be involved in something that is going to be illicit in the U.S., it would be hard to be a part of that. So I don’t think it is as big of a commitment as a lot of people think. It’s just like, ‘Well, I’ve got to take care of Facebook first and foremost.’”
The question about the proposed Libra launch remains. For all parties involved, it seems that a delay in Libra is preferable to losing Facebook and the US market in perpetuity.
Mastercard Left Libra Over Regulatory And Viability Concerns: CEO
“It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right,’" Banga told the news.Mastercard left Libra because of reasons which are now emerging. According to Banga, financial inclusion would mean that a government is able to pay citizens in a certain currency which they must be able to understand how to use and must be usable in day-to-day transactions for items such as food.
"If you get paid in Libra [coin] . . . which go into Calibras, which go back into pounds to buy rice, I don’t understand how that works," he said.The cryptocurrency news today also show that a lack of a clear business model for Libra is what raised another red flag for Mastercard. The Libra coin news before showed that Mastercard was not the only one leaving the stablecoin project - firms like Visa and PayPal did the same at the same period.
"When you don’t understand how money gets made, it gets made in ways you don’t like," the CEO of Mastercard said.Once Mastercard left Libra, the company started investigating the potential use of the project. Banga appeared to have concerns when association members would also not firmly commit to the controls of data management including the know-your-customer (KYC) and anti-money laundering (AML) legislation. Visa, on the other hand, had pulled out because the project had not been able to "satisfy all requisite regulatory expectations" as a spokesperson later confirmed. Out of the 28 founding members of the Libra project, eight have left. The British telecom conglomerate Vodafone was the last leaving in January 2020 when it decided to focus on its own digital payments service. As Mastercard left Libra, the payments giant adopted a very cautious approach to distributed ledger technology.
CEO Of Facebook Talks About Libra Again And How It Is Being Handled
"We are taking multiple approaches on payments where things like what we are doing with payments and WhatsApp or Facebook Pay are overall built on top of traditional payment infrastructure. The longer-term work that we are proposing around Libra is now being handled by the independent Libra foundation."The CEO of Facebook also stated that the firm is working on creating a digital wallet which will work well with Libra - noting that most companies that make payments are national and based in a country without any incentive to make this work all over the globe.
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.
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