Nobel Prize winner in economics Joseph Stiglitz believes that only a fool would entrust his money to Facebook.
According to him, the bulk of complaints about traditional currencies are related to the volatility of their value. However, most national currencies have long been "exceptionally stable".
In addition, Stiglitz says that the banking sector has made significant efforts to ensure financial transparency and has made "the banking system more difficult to use for money laundering and other atrocities. The economist notes that the current technology already allows transactions to be carried out quickly enough, so Libra will be used primarily as a means of circumventing existing anti-money laundering requirements and policies.
"The last thing we need is a new mechanism to facilitate illegal activities and the laundering of the resulting proceeds, which will almost certainly make another cryptocurrency", he writes.
Stiglitz sees low competition as the main problem of the banking sector, especially for American banks. The decision will require the intervention of regulators, he adds.
The economist considers "deposits" to be the main source of income for Libra's creators if they do not pay interest to the cryptocurrency holders. He also mentions the issue of taxes to be paid on the transfer of cash and the conversion of cryptocurrency into fiat.
According to Stiglitz, Libra can have two commercial models: aiding and abetting illegal activities and collecting user data. In the first case, the project should be closed immediately, and in the second case, the privacy and safety of consumers may be affected, he says.
"In just a few short years, Facebook has earned the kind of mistrust that the banking sector has had over the years. Facebook management was faced with a choice of whether to keep their promises or make money. Nothing is as much about money as creating a new currency," he concludes.
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