Facebook is Trying to Become a Virtual Country, Expert Warns

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from The Anti Media:

Facebook has announced a plan to launch a new cryptocurrency named the Libra, adding another layer to its efforts to dominate global communications and business. Backed by huge finance and technology companies including Visa, Spotify, eBay, PayPal and Uber – plus a ready-made user base of 2 billion people around the world – Facebook is positioned to pressure countries and central banks to cooperate with its reinvention of the global financial system.

In my view as a social media researcher and educator, Facebook CEO Mark Zuckerberg is clearly seeking to give his company even more political power on a global scale, despite the potential dangers to society at large. In a sense, he is declaring that he wants Facebook to become a virtual nation, populated by users, powered by a self-contained economy, and headed by a CEO – Zuckerberg himself – who is not even accountable to his shareholders.

Facebook hasn’t behaved responsibly in the past, and is still wrestling with significant public concerns – and investigations – about its privacy practicesinformation accuracy and targeted advertising. Therefore, it’s important to see through the hype. People must consider who is reshaping the world, and whether they are doing it in the best interests of humankind – or whether they are just seeking to benefit the new class of elite technology executives.

Humanity needs ethical leadership, and time to think through the potential repercussions of rapid technological change. That’s why, in my view, Facebook’s cryptocurrency should be blocked by financial regulators until its design has been proved to be safe for all of global society.

You might not want to trust this man. Anthony Quintano/Wikimedia Commons, CC BY

 

Understanding Libra

Technology companies are interested in a global currency that is native to the internet. That could allow companies like Facebook and Twitter to bring in more users to their platforms, and collect money from businesses who want to join the new system. They also want to siphon off business from the existing financial services industry. That sector is worth trillions of dollars, is enormously profitable, and yet has struggled to implement its own digital currency.

The technical details of Facebook’s plans are still emerging, but it seems that the company is not seeking to compete with Bitcoin or other cryptocurrencies. Rather, Facebook is looking to replace the existing global financial system with an all-new setup, with Libra at its center.

The company may be counting on increased public interest in cryptocurrencies and financial technologies, and its market strength, to overcome objections. However, I don’t believe Facebook should be allowed to wreck the global financial system like it has, as many see it, wrecked global communications.

Speeding global exchange

There is definitely a need for smoother, faster and cheaper ways to send money around the world, and to provide access to financial services to the many people who do not have formal bank accounts. There is real potential to Libra, but there are likely to be ways to improve even more, developing a payment system that better serves the world as a whole.

At least at the moment, the Libra is being designed as a form of electronic money linked to many national currencies. That has raised fears that Libra might someday be recognized as a sovereign currency, with Facebook acting as a “shadow bank” that could compete with the central banks of countries around the world.

It doesn’t help that Facebook is already positioning itself to evade regulatory scrutiny by creating a corporate subsidiary that will join an ostensibly independent governing body for the Libra.

To protect consumers, regulators should look carefully at whether the new system supporting the Libra is sound. It may be that an entirely new set of financial rules and regulations is needed to shield the existing financial system from harm if the Libra becomes more popular than national currencies. At the very least, governments need to proceed slowly and carefully when new products may introduce systemic risks into our environment. Even the CEO of Google has acknowledged that. In my opinion, Libra’s planned launch in 2020 does not allow enough time to fully vet this technology and its risks.

Protecting the global financial system

Financial regulations have developed over time to encourage trust between unknown parties, and to protect regular customers from fraudsters and corporate greed. There are also rules that help governments prevent and detect transactions that support crime and terrorism.

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