The social media leviathan is soon launching Libra, a “stablecoin” tied to a basket of fiat currencies which will be available to users of all Facebook’s platforms. Here are 6 predictions by Forbes’ Caitlin Long on what this might bring.
- The availability of a reliable alternative to the fiat currencies in developing countries will indirectly exert pressure on central banks to keep the values of their currencies steady, thus improving the lives of their citizens.
- Facebook will pay interest to the holders of the currency as the coin will probably be too big and visible for the company to get away with pocketing the float.
- Since the foundation formed to govern the project will do what central banks do – define the basket weights for the fiat currencies involved and manage the assets – it will quickly gain huge power to move capital markets.
- There will be a lot of regulatory uncertainty revealing how outdated financial regulations truly are, but the regulators could even cut Facebook some slack due to the tax data honeypot the project will generate.
- Facebook’s regulatory reporting program will have an enormous impact on financial reporting as every transaction would be traceable by governments, which could even contribute to countering terrorism financing.
- The biggest benefit of the whole story will actually go to bitcoin. Facebook will popularize and enlighten people on cryptocurrencies, but in the end, they will migrate to bitcoin, as it is scarcer and not fiat-based.