Libra: Is it Really About the Money?

Abstract

The announcement by Facebook that Libra will "deliver on the promise of 'the internet of money'" has drawn the attention of the financial world. Regulators, institutions, and users of financial products have all been prompted to react and, so far, no one managed to convince the association behind Libra to apply the brakes or to convince regulators to stop the project altogether. In this article, we propose that Libra might be best seen not as a financial newcomer, but as a critical enabler for Facebook to acquire a new source of personal data. By working with financial regulators seeking to address concerns with money laundering and terrorism, Facebook can position itself for privileged access to high-assurance digital identity information. For this reason, Libra merits the attention of not only financial regulators, but also the state actors that are concerned with reputational risks, the rule of law, public safety, and national defence.

The Development of Central Bank Digital Currency in China: An Analysis

“…CBDC, which is issued by a central bank, is risk-free by definition and constitutes a liability on the balance sheet of the central bank, as a debt owed by the central bank to the users of the CBDC, similar to banknotes and coins. However, private money, including without distinction stablecoins such as "Tether" and commercially-issued digital currency such as Facebook's renamed "Diem" (formerly "Libra" [9]), intrinsically incur counterparty risk, among a variety of other risks and costs, as the guarantors of their value could fail [10]. The second dimension of safety involves the extent to which CBDC must remain available for retail consumers to access and use, must remain stable in value, and must remain widely accepted by retail merchants, particularly during periods of economic distress.…”

Privacy by Design in Value-Exchange Systems

“…The challenge of compelling powerful incumbents to change behaviour is daunting, although there is evidence that the EU has recently begun to explore ways to change the model that allows data brokers to be as successful as they are [8]. Of course, the value of payments data is not lost on global data brokers and profiling businesses, who are keen to access such data [9]. Financial transactions are particularly sensitive as a high-value source of information about the habits, predilections, and circumstances of individual persons, not only because of the high degree of assurance provided by AML/KYC procedures that are prerequisites to such transactions in practice today but also because of the fact that exchanges of value definitionally consume scarce resources that require judgement and parsimony on the part of transacting parties.…”