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David Marcus hinted that the U.S. will lose its leverage in controlling the global money supply to China if Facebook’s Libra is derailed.
Facebook‘s head of the Libra project – David Marcus – has recently given an indirect warning to the U.S. lawmakers of losing the digital currency war to China, if the company’s Libra Project fails.
Since its Libra cryptocurrency announcement in June 2019, Facebook has been in odds with the regulators over the Libra launch. The regulators have repeatedly questioned Facebook’s ability to execute this project at a global level.
However, David Marcus has warned Washington that if Libra is derailed, Beijing will take a lead in the global currency race. Speaking to Bloomberg News, Marcus stated:
“The future in five years, if we don’t have a good answer, is basically China re-wiring” a large part of the world “with a digital renminbi running on their controlled blockchain. He warned about the prospect of “having a whole part of the world completely blocked from U.S. sanctions and protected from U.S. sanctions and having a new digital reserve currency” with no alternative.”
Marcus comments come a day before the testimony of Facebook CEO Mark Zuckerberg, scheduled later today with the U.S. Congress. Zuckerberg is likely to answer all concerns of the lawmakers pertaining to the Libra Project.
China’s Digital Currency Ambitions
Soon after the Libra announcement in June, China has accelerated its digital currency development process. China is working on a digital Renminbi citing global competition in the crypto space. In the past, Chinese lawmakers have acknowledged that if Libra becomes too big, it will pose a threat to the country’s financial stability.
Libra’s announcement has certainly pushed lawmakers across the globe to seriously think about the evolving crypto industry. It has rather created a cascading effect wherein major global economies and their central banks are evaluating the possibilities of having a digital currency.
Recently, an official of the U.S. Federal Reserve said that lawmakers and the central banks are “actively debating” on issuing a digital dollar. The official added that with the advent of the digital revolution if other national currency scales massively in global adoption, the USD has the risk of losing its status as the global reserve currency. This will further destabilize the US’s stronghold in global trade and commerce.
Thus, we could possibly see the U.S. central bank issuing a CBDC in the coming years. In such a situation, it is very much possible that lawmakers won’t let Facebook’s Libra succeed. However, seeing this development, David Marcus said that Facebook is open to using fiat-pegged national-currency stablecoins for its Libra project.
Taking a dig at Facebook venturing into the global currency space, Apple CEO Tim Cook said that big organizations shouldn’t work towards controlling the money supply. He added that this the job of government agencies and should be left to them.