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Facebook’s Libra is far from broad acceptance as a world currency

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  • Naoyuki Iwashita

    (Kyoto University School of Government)

Abstract

Facebook’s Libra intends to provide a financial infrastructure for the people living in the developing countries in which financial inclusion rates still fall low. Libra plans to stabilize the market by holding legal currencies as collateral. However, markets determine prices, and there is no guarantee that the prices can be controlled as intended. As long as a central authority holds legal currencies as collateral and issues the Libra, it cannot be a decentralized structure like bitcoin. Libra plans to move to a permissionless blockchain within 5 years, but no concrete steps have been proposed yet. Thus, it would be difficult for Libra to be realized and widely accepted as a world currency.

Suggested Citation

  • Naoyuki Iwashita, 2021. "Facebook’s Libra is far from broad acceptance as a world currency," Evolutionary and Institutional Economics Review, Springer, vol. 18(1), pages 335-339, April.
    • Handle: RePEc:spr:eaiere:v:18:y:2021:i:1:d:10.1007_s40844-020-00165-2
    DOI: 10.1007/s40844-020-00165-2
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    More about this item

    Keywords

    Libra; Blockchain; Financial inclusion; Bitcoin; Regulation; Anti-money laundering;
    All these keywords.

    JEL classification:

    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K2 - Law and Economics - - Regulation and Business Law

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