“If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies,” said Hughes, “If global regulators don’t act now, it could very soon be too late.”
Hughes explains that the founding members of The Libra Association, which are mostly private industry giants that have paid $10m membership fees, will have significant advantage to “disrupt and weaken” nation states.
He says “Vital decisions about Libra’s administration, security and underlying assets will be made by the Switzerland-based Libra Association — essentially Facebook and its largely corporate partners. To avoid complaints that setting up this coin would give a single company dangerous powers, Facebook has smartly limited itself to a single vote on the commission.”
Emphasizing the role of central banks to help stabilize local economies in times of financial crises, he warned that if enough people exchange their local currencies in favor of decentralized currency like Libra, it could jeopardize the ability of governments to control monetary supply and impose fiscal controls, especially in emerging economies.
“After many mistakes, we have learnt that we want a central bank to act to increase or decrease the monetary supply in moments of contraction or expansion” he says, “This power to help keep an economy stable is something we should be reinforcing and improving, not endeavoring to demolish.”
Moreover, he argues that if Libra becomes successful, The Libra Association will have huge advantage over setting the policies for critical issues such as privacy of transactions, identity verification and response to theft.
He says, “What Libra backers are calling ‘decentralization’ is in truth a shift of power from developing world central banks toward multinational corporations and the US Federal Reserve and the European Central Bank.”
Earlier on Thursday night, the governor of Bank of England, Marc Carney, delivered a cautiously optimistic speech explaining while he remained “open-minded” about Libra, he urged the regulars to carefully vet the implications and ramifications of the the Libra project.
Facebook is due to face the US regulators on July 16th. David Marcus, who oversees Facebook’s blockchain efforts, is expected to testify .
This is not the first time Huges has expressed himself publicly against Facebook. In a lengthy op-ed on The New York Times on May 26, he said that Facebook has become too big and powerful that it is poised to threaten our democracy. He suggested breaking up Facebook to end its monopoly and creating a Congressional oversight entity to regulate tech companies.
Pete is a huge cryptocurrency fan and loves to keep tab on how digital currency is transforming the world. A proud father to a son, he loves exploring nature in his downtime.