France, Germany, China, the United States—and just about every other country on Earth—they’ve all got Libra all wrong, according to Facebook’s David Marcus.
And the former PayPal executive, who now serves as one of the lead developers of Facebook’s Libra project, is once again coming out in defense of his crypto baby.
In a series of tweets, Marcus attempted to put to rest the various fears raised by governments around the world by explaining that the notion of Libra negatively affecting the “monetary sovereignty of nations” is wrong for several reasons.
For one thing, he said, Libra is built to run atop a system of already existing currencies, not to replace them. He explained that Libra will itself be backed by several forms of fiat. So, in order for Libra to exist, it must have the “equivalent value” of these currencies “in its reserves.”
The creation of new money is only permitted for sovereign nations, not businesses, Marcus said, and the Libra project is working with governments everywhere to ensure regulation is in place that will prevent it from deviating from its present infrastructure.
Phew. What a relief—right?
Nah, not so fast, said Eric Wall, a privacy technology fellow with the Human Rights Foundation. “Just because there isn’t new money creation does not mean you can’t threaten monetary sovereignty,” Wall responded on Twitter. “The Libra could enable a population in a country to abandon their native currency in favor of Libra (when the native currency isn’t even a part of the basket).”
Indeed, others such as Olta Andoni, head of Ziliak Law’s blockchain practice and an adjunct professor at the Chicago-Kent College of Law, were similarly unimpressed with Marcus’s attempts at an explanation: “You need a 1/4000 thread to address all concerns/legal questions about Libra, [David Marcus]. You barely scratched the surface,” she wrote on Twitter.
Marcus’s impromptu defense of Libra likely came as a response to both French and German finance officials who said they would not allow Libra to move forward in Europe. (The two nations are, incidentally, backing the European Central Bank (ECB) and its plans for a digital currency that will compete with Libra.)
In a joint statement last week, French Finance Minister Bruno Le Maire and Germany’s federal minister of finance, Olaf Scholz, said that “France and Germany consider that the Libra project, as set out in Facebook’s blueprint, fails to convince us that risks will be properly addressed.”
Facebook’s reputation has yet to fully recuperate from its scandalous ties to Cambridge Analytica revealed last year. The company had been selling users’ private data to third parties for advertising purposes for years. What followed was an embarrassing Senate hearing in which CEO Mark Zuckerberg was grilled unmercifully on live television, culminating with Facebook being fined billions of dollars.
Since the hearing, overall trust in Facebook has fallen by more than 60 percent. David Marcus was also subjected to a congressional hearing earlier this year, with lawmakers expressing concern over the payment system’s potential access to customers’ financial information.