Facebook has more than 2.3 billion active users (active users here refers to those that have logged in to the social network within 30 days). With such a large customer base, even if only a quarter of them decide to use Libra coin as their currency, the coin will become widely accepted very quickly. This means it has great potential to influence the global economy.
In 2018, Facebook was faced with claims that it had allowed third parties like Netflix and Amazon access user data without customer knowledge. Additionally, there was also the Cambridge Analytica data mining scandal where Facebook was said to have released 87 million user’s data to the company which was supposedly used to influence the USA elections. With such incidences happening around the company, it is not sound to trust that their coin would ensure customer data is safe.
But here is the deal, not even the founders of the Libra coin project know precisely what the consequences of their currency would be; this should make every policymaker worried even more. With Libra in the picture, it will be even harder to control things like inflation.
Inflation and Libra- in modern financial systems, when countries face inflation, their central banks put in place measures such as raising liquidity ratios, and interest rates so that they can reduce money in circulation. It will be impossible for such measures to function if the largest money distributor is a private company.
Libra would cause a recolonization of the east- Libra will be backed by powerful currencies such as the dollar, Yen, and Euro, to give the coin stability. Imagine what would happen if citizens of a developing country like Kenya, shift to using Libra instead of their national currency. This would reap their government taxation powers as well as leave them with minimal control over monetary policies. The developing countries will be forced to follow the decisions made by central banks from European countries and federal reserves. Is that not modern colonization?
A government that cannot control its monetary policies is almost illegitimate, meaning that Libra is bad news for African countries. This is just but a bleak image of what Libra could do if allowed to launch and that’s why every policymaker out there should be dreary of this project (Libra) even though it promises heaven for its users.
What do you think, should the project be given a green light to launch?