Libra just can’t seem to catch a break. Following months of haggling by U.S. lawmakers and European officials, a Romanian bank chief is adding his negative opinions to the mix, saying that Libra is “dangerous” and likely to do irreparable damage to the global financial infrastructure.
Libra Is Getting Hit from All Sides
Daniel Daianu, president of Romania’s Fiscal Council, says that if Libra ever does reach full potential, banks are likely to disintegrate overnight. He states:
Cryptocurrencies are highly speculative financial assets, and assets such as Libra, whether they rely on a bunch of assets which are considered safe or on coins, are very dangerous because they are part of the logic of those who believe that there is a need for parallel markets and the disappearance of central banks.
Libra has been the object of mixed to negative reception since it first emerged last summer. Many users of Facebook have commented that they do not feel comfortable with the platform governing a system that could potentially hold sway over their financial data. A new survey suggests trust in Libra among Facebook users is quite weak.
In addition, Mark Zuckerberg and David Marcus - the head of Facebook’s blockchain division - have been at the center of several hearings in which members of the U.S. Congress question not only Libra’s properties, but its principles. The concern is that Libra could potentially open the door to money laundering and other white-collar crimes, while proving unable to keep customer information safe.
Daianu says that the 2008 financial crisis and subsequent recession has caused a lot of mistrust among the general public for standard banking institutions, but while he does encourage other forms of monetary tools, he’s not sure Libra has what it takes to ensure security. He states:
The financial crisis ruined the reputation of governments and central banks, and some think we need other currencies, parallel circuits, non-hierarchical structures. So, the discussion is much deeper. It is not only about the monetary system. It is not by chance that libertarians are so attached to this vision. Those who reject central banks would like to return to the world of free banking. That is why Libra is very dangerous, because it would target billions of users and, in fact, would almost inevitably fracture the monetary system, and central banks would lose their effectiveness.
Finding Another Tool for the Job
As it stands, central banks are having a very difficult time building and implementing their present policies, according to Daianu. He further states:
For the future, if we put cryptocurrencies aside, which must be very strictly regulated, I am for a very severe regulation of capital markets, of what is called the shadow banking sector. In the future, monetary policy will be a mix of pragmatic inflation targeting and the control of monetary aggregates.