In May, Facebook co-founder Chris Hughes shocked many when he expressed grave concerns about Facebook’s CEO, its business and its impact on the world. He went as far as suggesting that Facebook should be broken up. Two months later, Hughes has another interesting remark to share. He has warned that Facebook’s new planned digital currency Libra would shift monetary power to corporate giants. [Editor’s note: the link may be paywalled; alternative source.] In an op-ed he wrote today: If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies, which also include Visa, Uber, and Vodafone. If global regulators don’t act now, it could very soon be too late. I’ve been a cryptocurrency sceptic, believing that the instability and regulatory challenges are just too sizeable. But Libra is different because it is a “stablecoin”, with a value pegged to a basket of currencies and other assets. Anyone, whether they use Facebook or not, can buy in with a local currency and cash back out at any time. Vital decisions about Libra’s administration, security and underlying assets will be made by the Switzerland-based Libra Association — essentially Facebook and its largely corporate partners. To avoid complaints that setting up this coin would give a single company dangerous powers, Facebook has smartly limited itself to a single vote on the commission.
That doesn’t make the prospect of Libra’s success any less frightening. This currency would insert a powerful new corporate layer of monetary control between central banks and individuals. Inevitably, these companies will put their private interests — profits and influence — ahead of public ones. […] The Libra Association’s goals specifically say that ability will encourage “decentralised forms of governance.” In other words, Libra will disrupt and weaken nation states by enabling people to move out of unstable local currencies and into a currency denominated in dollars and euros and managed by corporations. The Libra Association promises to choose stable currencies and assets unlikely to suffer inflationary crises. The sponsors are right that a liquid, stable currency would be attractive to many in emerging markets. So attractive, in fact, that if enough people trade out of their local currencies, they could threaten the ability of emerging market governments to control their monetary supply, the local means of exchange, and, in some cases, their ability to impose capital controls.