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US Senator Sherrod Brown: Facebook is delusional

“Mark Zuckerberg said that Facebook is more like a government than a company. That’s delusional.” US Senator Sherrod Brown said in a video tweet by NowThis News.

The video was released a few hours after Facebook’s hearing with the Senate Banking Committee. In the video, Brown added “We have to protect our democracy. We should be making it harder, not easier to concentrate so much power in big corporations like big banks and big tech companies like Google and Facebook.”

Brown raised a serious concern on Facebook having an ability to force users to use their own product to create new monopoly money. He asked, “what happens when Facebook forces businesses to quit accepting your credit card or your debit card? You could be forced to use Facebook’s new monopoly money. What about small business owners, forced to use it, or lose access to Facebook’s millions of users?”

During the hearing on Facebook Libra, Brown remarked: “We’d be crazy to give them a chance to let them experiment with people’s bank accounts.” Senator Martha McSally shared the same sentiment with Brown. She said, “instead of cleaning up your house you are launching into a new business model.”

David Marcus, Head of Calibra emphasized the separation between social and financial data during the hearing. He said, “the way we’ve built this is to separate social and financial data because we’ve heard loud and clear that they don’t want those two types of data streams connected, so this is the way the system is designed.”

Marcus also stressed that Facebook is not aiming to compete with sovereign currencies. He added, “Facebook will only have one vote and will not be in a position to control the association, nor will Facebook or the Libra Association position themselves to compete with sovereign currencies or interfere with monetary policy.”

German Policymakers Cannot Accept Facebook’s Libra

German Finance Minister Olaf Scholz has stated that Berlin will reject the emergence of parallel currencies such as Facebook’s stablecoin, Libra.

During a panel discussion in Berlin on the 17th of September, Scholz said, “We cannot accept a parallel currency,” before emphasizing, “You have to reject that clearly.”—as reported by Reuters.The German cabinet is expected to adopt a comprehensive blockchain strategy with the aim of digitally enhancing its economy. The strategy also consists of plans to tackle risky new technologies such as Libra, which German policymakers fear could become an alternative currency.

David Marcus, Head of Facebook’s Calibra, continues to reject Germany’s notion that Libra’s cryptocurrency project intends to form a new currency.At a meeting between Libra Founders and 26 global central banks Marcus stated that Libra’s purpose was to create a “better payment network” which would run on top of existing currencies. He assured the group that the creation of new money would remain “the province of sovereign nations.”

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ING Warns Facebook’s Ties With Banks May Be Breached Due To Libra Regulatory Concerns

Ralph Hamers, the CEO of ING, warned that Facebook’s relationships with banks will probably be cut off due to its inability to address Libra regulatory issues, especially the money-laundering fears. Hamers made this known in an interview with the Financial Times on Oct. 22, stressing that banks, especially ING have functions to play as gatekeepers in the financial ecosystem. Thus, he noted that it would not be easy for banks to support enterprises that could expose the banking institutions to financial crimes.

Regarding ING’s decision not to support Facebook’s Libra project because of its unresolved regulatory issues, he said:

“We are such a large, regulated institution that you don’t want to risk anything. We’ve said we’ll take a look and see how this develops.”

The possibility of Libra’s customers to engage in money laundering has made a lot of global regulatory queries since its launch. This has resulted in some of Libra’s members leaving the association, hoping to come back when the project has resolved its regulatory controversies. It is in line with this that banks take precautionary measures and exit the client, or not accept the client.

The report also noted a Facebook’s spokesperson statement regarding the Libra project, which implied that Facebook is trying to get everything right.

The spokesperson said, “From the beginning, we’ve said we’re committed to taking the time to get this right. As a member of the Libra Association, we will continue to be a part of this dialogue to ensure that this global financial infrastructure is governed in a way that is reflective of the people it serves. Facebook will not offer Libra through its Calibra wallet until the Association has fully addressed regulators’ concerns and received appropriate approvals.”

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Facebook and Calibra Head David Marcus: What Problems Would Wholesale CBDCs Even Solve?

During a panel discussion at the World Economic Forum which included the topic of Central Bank Digital Currencies (CBDCs), David Marcus, Head of Calibra, highlighted that digital currencies are the key to innovating cross-border payments and solve the issues of the unbanked—regardless of if that digital currency is Libra or not.

As reported by Bloomberg, the rift between the global leaders on the future of digital payments was on display during the World Economic Forum’s annual meeting in Davos, Switzerland.

The World Banks are Developing CBDC

Recently reported by Blockchain.News, six central banks around the world have come together to create a working group to share experiences on use cases on central bank digital currency (CBDC). With significant expertise in exploring digital currencies, these six central banks are the Bank of Canada, Bank of England, Bank of Japan, European Central bank, Sveriges Riksbank in Sweden, and the Swiss National Bank, along with the Bank of International Settlements (BIS).

Benoît Cœuré, the Head of the BIS Innovation Hub, will be the co-chair of the group along with Jon Cunliffe, the Deputy Governor of the Bank of England and the Chair of the BIS Committee on Payments and Market Infrastructures (CPMI). Cœuré is also the chair of the G7 working group on stablecoins and was previously the CPMI chair.

Marcus: Retail CBDCs Makes Sense, Wholesale CBDCs Do Not

During the Panel Discussion, Marcus was quick to highlight the difference between retail and wholesale CBDC—One is Retail CBDC for retail payments, which connects directly to the consumer. The other is Wholesale CBDC is to facilitate payments between banks and other entities that have accounts with the central bank.

On the prospect of Wholesale CBDC, Marcus argued, “If you are targeting wholesale distribution to banks, then what problem are you solving? You could probably have some efficiency gains, but banks currently have windows. The Fed, the ECB—they are quite functional.”

Marcus further questions on whether the banks are technologically able even to handle retail CBDCs. He noted that the development of the “hybrid model,” which incorporated properties of both retail and wholesale versions of CBDC, could solve key issues.

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Libra Adds New Nonprofit Member Heifer International to Tackle World Hunger and Poverty After Enduring Months of Regulatory Scrutiny

The Libra Association has welcomed a new member, Heifer International, a nonprofit organization aimed to tackle world hunger and poverty. The addition of Heifer International brings the tally of members in the Libra Association to twenty-three.

Around 780 million people in the world live in extreme poverty and spend less than $1.90 per person per day. A third of children who live in low to middle-income countries suffer from chronic malnutrition, as the adults may not have access to nutritious food due to insufficient income levels, leading to a child death rate of 45 percent due to malnutrition, according to the World Health Organization, 2018.

Heifer International works with some of the world’s poorest farmers, providing them with access to new markets and sustainably increase production. The United Nations Food and Agriculture Organization estimates that less than 10 percent of these farmers can have access to credit. With around 1.7 billion adults in the world remain unbanked, and after surviving months of intense backlash by global regulators, Libra could take supporting financial inclusion to the next level.

Announced in a blog post, Heifer International CEO Pierre Ferrari indicated that the Libra project “has the potential to deliver a low-cost, more accessible and more connected global financial system.”

Last week, Facebook made an announcement regarding new updates to its whitepaper, to move away from its original plan of a permissionless digital currency, to a coin that would be subject to foreign exchange controls and regulations.

Libra has applied for a payment system license from the Swiss Financial Markets Supervisory Authority (FINMA), to be able to allow the Libra payments system to be used publicly. One of the major updates of the Libra whitepaper is that it explicitly mentions the limits of what users are able to do on the network, including balance and transaction limits, and the network would only be accessible to regulated crypto firms in the beginning.

Although Libra hopes to work with as many central banks as possible, for jurisdictions whose currency has not been added to Libra’s stablecoin backing will be unable to use it.

Facebook Calibra Digital Wallet Gets a New Name – Novi

What is Novi?

Facebook has renamed its digital wallet, Calibra, as Novi. Calibra was the digital wallet that the social media giant has been building to access Libra digital currencies.

In a blog post, the company explained that the new name was inspired by the Latin words “novus” and “via,” meaning “new” and “way.” The digital wallet company, a subsidiary under Facebook will now be named Novi Financial.

As previously reported by Blockchain.News, Libra has abandoned its original plan of a widely accessible permissionless digital currency aimed to solve financial inclusion issues, due to ongoing regulatory backlash.

Libra was seen as a controversial project, especially in the eyes of regulators. Libra has then applied for a payment system license from the Swiss Financial Markets Supervisory Authority (FINMA), to be able to allow the Libra payments system to be used publicly.

One of the major updates of the Libra whitepaper is that it explicitly mentions the limits of what users are able to do on the network, including balance and transaction limits, and the network would only be accessible to regulated crypto firms in the beginning.

As stated on Novi’s website, the project is now moving towards providing individual stablecoins for major fiat currencies, including USD, EUR, and GBP. Previously, the Libra stablecoin aimed to be backed by a basket of global currencies, which also included the Singapore Dollar, and Japanese Yen.

Despite changing the name of the digital wallet, Facebook says the mission for both Novi and Libra remains unchanged – enabling the transfer of money as easy as “sending a message.”

A standalone Novi app is a part of the plan, as well as a version where it is integrated with WhatsApp and Facebook Messenger to allow consumers to send money to their contacts easily.

David Marcus, the Co-creator of what was once known as Calibra, now Head of Novi also explicitly mentioned in his tweets, that instead of creating a global, digital currency payment network, the focus has shifted to act as a wallet for stablecoins. Although Libra hopes to work with as many central banks as possible, for jurisdictions whose currency has not been added to Libra’s stablecoin backing will be unable to use it.

Binance’s take on Libra

Binance took a closer look at Libra’s recent whitepaper update and concluded that Facebook’s project could potentially disrupt the payment industry.

There is an advantage of issuing widely-available programmable currency, which could lead to efficiency gains. As an optimistic comparison, Binance added, “Libra’s envisioned global payment system could do to the payment industry what SpaceX did to the space industry: shake the foundations of a well-established sector with high entry barriers.

Technology entrepreneur Elon Musk, the founder of SpaceX, was mentioned in the report as an industry leader in the space sector due to its significant step forward in improving speed for rocket journeys.

The report also highlighted that most payment systems are operated by a central bank and of regional scope, as Libra could have an advantage has it could potentially have a wider reach of users. Focusing further on financial inclusion, Binance claims that Libra positions itself as a new financial framework to “enable a simple global currency and financial infrastructure that empowers billions of people.”

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