Super sovereign currency – this is a core issue that is deliberately avoided by testimony. From the observation of the essential attributes of currency and the logic of development, it is certain that Libra, which envisages the creation of a super-sovereign currency, is difficult to succeed.
On October 23rd, US local time, Facebook CEO Mark Zuckerberg went to the Congressional Financial Services Committee to publish a white paper on it, which is scheduled to be launched “Libra” in 2020, with the US dollar, euro, yen, pound and Singapore dollar.
He particularly emphasized in his testimony:
“More than 1 billion people in the world today cannot use bank accounts, but if they had the right system, they could enjoy these banking services on their mobile phones. These people include 14 million Americans”
Libra will be a global payment system “Supported entirely by cash and other highly liquid assets”; “This is not trying to create a sovereign currency”; “Libra does not want to compete with any sovereign currency and does not want to enter the monetary policy arena”;
The above statement highlights Libra as a digital financial innovation that will benefit more than one billion people who do not enjoy banking services; will not compete with sovereign currencies such as the US dollar, but will enhance the international status of the US dollar and other basket currencies;
If the United States does not support Other countries (mainly China) will lead and will have a serious impact on the international leadership of the US economy and finance!
The result of a comprehensive link with a basket of currencies is to create a super-sovereign currency.
It must be made clear that a “stable currency” that is only linked to a single currency equivalent is fundamentally different from a “stable currency” linked to a basket of currencies: the former is actually the “token” of its linked currency, while the latter It is no longer a token, but a new super-sovereign (no border) currency! As a borderless currency with a basket of monetary assets as reserves, there is no independent and strict monitoring, it will be very terrible!
Imagine a comprehensive link with a basket of currencies to create a new “non-state currency” without borders and super-sovereignty. It is bound to compete with sovereign currencies, and it is impossible to co-prosper with the sovereign currency of the country. In this case, this is simply unrealistic! The same is true even if the IMF came out to create a super-sovereign eSDR.
Therefore, Mark Zuckerberg’s testimony does not mention Libra’s key issues, but only the benefits (not certain) of digital financial innovation may cover up the shocks and risks that it may have to create super-sovereign currencies. It is hard to be convinced!