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From the white paper: > "Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people." They do this by

by fnoof 7y ago

From the white paper: > "Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people." They do this by issuing coins in exchange for fiat money, which is held by the reserve. > "Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, pay dividends to investors who provided capital to jumpstart the ecosystem [...]. Users of Libra do not receive a return from the reserve." Conceptually this is a bank, but with no interest returned to users, no financial oversight from governments, controlled by Silicon Valley's top companies.

mensetmanusman 7y ago
There would be savings for cross border transactions. If governments aren’t going to support banking the poor, then why does it matter who does it?
- fnoof 7y ago
  It could definitely help a lot of unbanked people. But that seems to be a nice benefit rather than the core mission.
  - drcode 7y ago
    Yes, for unbanked people who, according to the Facebook FAQ, set up an account using a state-issued ID and jump through a bunch of other hoops that are the same you would need for a bank account.
- deleted 7y ago
  [deleted]
- JaRail 7y ago
  Assuming you can buy/sell it with better fees/rates. It's bound to be better than some and worse than others.
microcolonel 7y ago
If they could provide any history of being principled in their application of policy, it might be worth it; but as it stands, Facebook just sorta arbitrarily unpersons people on their platform, which gives me the impression that they'd be perfectly willing to debank them as well.
cptskippy 7y ago
And just to be clear, there will be transaction fees for using the platform.
gridlockd 7y ago
> Conceptually this is a bank, but with no interest returned to users, no financial oversight from governments, controlled by Silicon Valley's top companies. I disagree that this is "conceptually" a bank. Facebook's business model isn't lending out the reserves. If it was, banking regulation would apply. Also, in a modern bank, reserves are maybe 10%, and you get less than zero percent interest after inflation for that risk exposure. We've all seen in the past on how well "financial oversight" worked. At this point, I think I'd honestly rather put my money with Facebook than many of those actual banks out there. Facebook is at least a profitable company in its own right.
- DenisM 7y ago
  > We've all seen in the past on how well "financial oversight" worked It worked remarkably well - no consumer lost their deposits to a bank failure. The fact that banks lent out too much money had no impact on consumer deposits, thanks to oversight.
  - gridlockd 7y ago
    That had nothing to do with oversight and everything to do with the fact that the government can just print the money to save a bank - and it did so. That expectation itself caused reckless behavior of the banks - and it still does. People just don't fully grasp the consequences. Also, you may say this "worked" in the US, but other countries didn't get quite so lucky playing that game.
    - navigatesol 7y ago
      >That expectation itself caused reckless behavior of the banks - and it still does. People just don't fully grasp the consequences. What most people don't grasp is just how regulated the financial industry is. Silicon Valley loves taking risks (and failing!), but when a bank does it it's unacceptable? This stuff happens in a capitalist economy. I mean, it's not like it was "the banks" in a vacuum. It was governments, mortgage brokers, builders, house-flippers, your neighbour, speculators...everyone benefited from the wealth effect of cheap money and rising home values. Until they didn't; then it became the banks' fault.
deleted 7y ago
[deleted]
lanrh1836 7y ago
It’s hard for a govt to stop bitcoin from being used for money laundering but when it’s a small number of mega corps validating transactions + the price stability and privacy features I’m wondering how exactly they will stop money launderers or terrorist financiers from using Libra to thwart traditional bank AML triggers?
ryanmarsh 7y ago
All these years of being a staunch techno libertarian and this what we end up with. I’m embarrassed, I thought it would be different.
- um_ya 7y ago
  Facebook Token won't last. There is too much governmental interest in regulating/destroying it. Only a currency that works regardless of governments and regulations will survive. Something like Bitcoin, Ethereum, ect.
pierlu 7y ago
It will be interesting to see how the well known economy concept of "Optimum currency area" (see Robert Mundell, 1961) would apply in that case of a stable money anchored to a mixture of dollar/euro/yen. If it is like what happened to Euro in the face of a systemic crisis, that should be labor mobility and low wages for low-productivity countries.
tsrautde007 7y ago
https://medium.com/@tejas_rd/why-facebooks-libra-could-be-a-runaway-success-a7cd268f2485 https://medium.com/@tejas_rd/why-facebooks-libra-could-be-a-...
la_barba 7y ago
>Conceptually this is a bank, but with no interest returned to users, no financial oversight from governments, controlled by Silicon Valley's top companies. How so? I don't think they have access to your digital wallet, unlike a bank.
- driverdan 7y ago
  It's funded by you depositing fiat currency with them, like a bank. They earn interest on your deposits, like a bank.
  - la_barba 7y ago
    You convert your fiat currency into crypto currency. Once the exchange is done, you have no rights to the fiat currency. This is in no way similar to a bank. The bank can use your deposited money, whereas here the currency is always in your digital wallet, and only you can initiate a transaction in and out of it. Do you have any information that contradicts this? I've only skimmed the whitepaper.
    - lalaland1125 7y ago
      > Once the exchange is done, you have no rights to the fiat currency. This is incorrect. Facebook's tokens given users the right to exchange their tokens back for the backing assets.
      - la_barba 7y ago
        >Facebook's tokens given users the right to exchange their tokens back for the backing assets. Well, yeah, of course you can convert the tokens back, similar to how you can exchange between currencies, but it would also depend on the exchange rate. You would not necessarily get back the same amount you put in. "It is important to highlight that this means one Libra will not always be able to convert into the same amount of a given local currency (i.e., Libra is not a “peg” to a single currency). Rather, as the value of the underlying assets moves, the value of one Libra in any local currency may fluctuate. " https://libra.org/en-US/white-paper/#the-libra-currency-and-reserve https://libra.org/en-US/white-paper/#the-libra-currency-and-...
sonnyblarney 7y ago
If it's considered to be a currency by the gov. then regular financial regulations will apply.
justusthane 7y ago
Not disagreeing with the sentiment of your comment, but the article does say "Facebook, and its partners—two dozen so-called “validators” that will run the proprietary blockchain network—will govern a reserve of users’ funds, on which they will be able to accrue interest."
- supermatt 7y ago
  The partners accrue interest - not the users.
jlmorton 7y ago
This is not a bank. It's an asset and a payment network. Banks are organizations that borrow short to lend long. This is a stablecoin backed very closely 1:1 with fiat currency. There is no fractional reserve, and there is no lending.
- vel0city 7y ago
  If it is not fractional reserve, how do they guarantee interest payments for those ponying up the millions today?
- freddie_mercury 7y ago
  You don't need either of those things to be a bank. Check out "narrow banking" for the history, theory, and current attempts at it. From one survey: "Prior to the early-twentieth century, US banks tended to be much narrower than they are today. Common modern banking practices, such as maturity transformation and explicit loan commitments, arose only after the creation of the Federal Reserve and the FDIC"
hinkley 7y ago
And no federal insurance program.
- vel0city 7y ago
  Its not a bug its a feature!
herenorthere 7y ago
"No financial oversight" isn't quite true. it will absolutely be regulated by fincen, as is any MSB in the US. facebook will remain compliant with BSA/AML laws, since this currency/security will enter that domain

by fnoof 7y ago

mensetmanusman 7y ago

There would be savings for cross border transactions. If governments aren’t going to support banking the poor, then why does it matter who does it?

fnoof 7y ago
It could definitely help a lot of unbanked people. But that seems to be a nice benefit rather than the core mission.
- drcode 7y ago
  Yes, for unbanked people who, according to the Facebook FAQ, set up an account using a state-issued ID and jump through a bunch of other hoops that are the same you would need for a bank account.
deleted 7y ago
[deleted]
JaRail 7y ago
Assuming you can buy/sell it with better fees/rates. It's bound to be better than some and worse than others.

microcolonel 7y ago

If they could provide any history of being principled in their application of policy, it might be worth it; but as it stands, Facebook just sorta arbitrarily unpersons people on their platform, which gives me the impression that they'd be perfectly willing to debank them as well.

cptskippy 7y ago

And just to be clear, there will be transaction fees for using the platform.

gridlockd 7y ago

> Conceptually this is a bank, but with no interest returned to users, no financial oversight from governments, controlled by Silicon Valley's top companies. I disagree that this is "conceptually" a bank. Facebook's business model isn't lending out the reserves. If it was, banking regulation would apply. Also, in a modern bank, reserves are maybe 10%, and you get less than zero percent interest after inflation for that risk exposure. We've all seen in the past on how well "financial oversight" worked. At this point, I think I'd honestly rather put my money with Facebook than many of those actual banks out there. Facebook is at least a profitable company in its own right.

DenisM 7y ago
> We've all seen in the past on how well "financial oversight" worked It worked remarkably well - no consumer lost their deposits to a bank failure. The fact that banks lent out too much money had no impact on consumer deposits, thanks to oversight.
- gridlockd 7y ago
  That had nothing to do with oversight and everything to do with the fact that the government can just print the money to save a bank - and it did so. That expectation itself caused reckless behavior of the banks - and it still does. People just don't fully grasp the consequences. Also, you may say this "worked" in the US, but other countries didn't get quite so lucky playing that game.
  - navigatesol 7y ago
    >That expectation itself caused reckless behavior of the banks - and it still does. People just don't fully grasp the consequences. What most people don't grasp is just how regulated the financial industry is. Silicon Valley loves taking risks (and failing!), but when a bank does it it's unacceptable? This stuff happens in a capitalist economy. I mean, it's not like it was "the banks" in a vacuum. It was governments, mortgage brokers, builders, house-flippers, your neighbour, speculators...everyone benefited from the wealth effect of cheap money and rising home values. Until they didn't; then it became the banks' fault.

deleted 7y ago

[deleted]

lanrh1836 7y ago

It’s hard for a govt to stop bitcoin from being used for money laundering but when it’s a small number of mega corps validating transactions + the price stability and privacy features I’m wondering how exactly they will stop money launderers or terrorist financiers from using Libra to thwart traditional bank AML triggers?

ryanmarsh 7y ago

All these years of being a staunch techno libertarian and this what we end up with. I’m embarrassed, I thought it would be different.

um_ya 7y ago
Facebook Token won't last. There is too much governmental interest in regulating/destroying it. Only a currency that works regardless of governments and regulations will survive. Something like Bitcoin, Ethereum, ect.

pierlu 7y ago

It will be interesting to see how the well known economy concept of "Optimum currency area" (see Robert Mundell, 1961) would apply in that case of a stable money anchored to a mixture of dollar/euro/yen. If it is like what happened to Euro in the face of a systemic crisis, that should be labor mobility and low wages for low-productivity countries.

tsrautde007 7y ago

https://medium.com/@tejas_rd/why-facebooks-libra-could-be-a-runaway-success-a7cd268f2485 https://medium.com/@tejas_rd/why-facebooks-libra-could-be-a-...

la_barba 7y ago

>Conceptually this is a bank, but with no interest returned to users, no financial oversight from governments, controlled by Silicon Valley's top companies. How so? I don't think they have access to your digital wallet, unlike a bank.

driverdan 7y ago
It's funded by you depositing fiat currency with them, like a bank. They earn interest on your deposits, like a bank.
- la_barba 7y ago
  You convert your fiat currency into crypto currency. Once the exchange is done, you have no rights to the fiat currency. This is in no way similar to a bank. The bank can use your deposited money, whereas here the currency is always in your digital wallet, and only you can initiate a transaction in and out of it. Do you have any information that contradicts this? I've only skimmed the whitepaper.
  - lalaland1125 7y ago
    > Once the exchange is done, you have no rights to the fiat currency. This is incorrect. Facebook's tokens given users the right to exchange their tokens back for the backing assets.
    - la_barba 7y ago
      >Facebook's tokens given users the right to exchange their tokens back for the backing assets. Well, yeah, of course you can convert the tokens back, similar to how you can exchange between currencies, but it would also depend on the exchange rate. You would not necessarily get back the same amount you put in. "It is important to highlight that this means one Libra will not always be able to convert into the same amount of a given local currency (i.e., Libra is not a “peg” to a single currency). Rather, as the value of the underlying assets moves, the value of one Libra in any local currency may fluctuate. " https://libra.org/en-US/white-paper/#the-libra-currency-and-reserve https://libra.org/en-US/white-paper/#the-libra-currency-and-...

sonnyblarney 7y ago

If it's considered to be a currency by the gov. then regular financial regulations will apply.

justusthane 7y ago

Not disagreeing with the sentiment of your comment, but the article does say "Facebook, and its partners—two dozen so-called “validators” that will run the proprietary blockchain network—will govern a reserve of users’ funds, on which they will be able to accrue interest."

supermatt 7y ago
The partners accrue interest - not the users.

jlmorton 7y ago

This is not a bank. It's an asset and a payment network. Banks are organizations that borrow short to lend long. This is a stablecoin backed very closely 1:1 with fiat currency. There is no fractional reserve, and there is no lending.

vel0city 7y ago
If it is not fractional reserve, how do they guarantee interest payments for those ponying up the millions today?
freddie_mercury 7y ago
You don't need either of those things to be a bank. Check out "narrow banking" for the history, theory, and current attempts at it. From one survey: "Prior to the early-twentieth century, US banks tended to be much narrower than they are today. Common modern banking practices, such as maturity transformation and explicit loan commitments, arose only after the creation of the Federal Reserve and the FDIC"

hinkley 7y ago

And no federal insurance program.

vel0city 7y ago
Its not a bug its a feature!

herenorthere 7y ago

"No financial oversight" isn't quite true. it will absolutely be regulated by fincen, as is any MSB in the US. facebook will remain compliant with BSA/AML laws, since this currency/security will enter that domain