Surely, you with us together are chasing what happening with Libra. Thus, interesting news don`t make us wait long: the Facebook crypto project`ll create a “shadow banking” system.
US banks fear that Libra will reduce the volume of payments.
After the United States Federal Reserve asked some of the country’s largest banks about Libra, banks expressed their negative attitude towards the project, outlining the risks of a potential reduction in deposit accounts and bank payments, Bloomberg reported September 30.
Scales and similar stable coin projects, where a digital coin is tied to a base price of one or more paper currencies, also pose a potential problem for a banking business model based on confidentiality, banks reported earlier at the FAC quarterly meeting in September.
Also, noting that about 52% of the US population, or 170 million people, were considered active users of Facebook in 2018, banks suggested that Facebook potentially creates a digital currency ecosystem outside of authorized financial markets or a “shadow banking” system.
Banks claimed: “As consumers take Libra, more deposits may be transferred to the platform, which will lead to an effective reduction in liquidity, and such disinter-mediation can further extend to credit and investment services.”
Banks want to continue to manage the local economy.
In addition, banks warned that Libra on Facebook could affect national monetary policy, citing “the potential to reduce the ability of states to control, manage and influence the local economy.”
Then, the FAC, which includes 12 representatives of the US banking industry, consults and advises the Federal Council on economic and financial issues within the jurisdiction of the Council.
Meanwhile, Facebook planned to invite its chief operating officer Cheryl Sandberg to the House Financial Committee in October to testify about Libra and plans to issue a stable coin in 2020.