South Korea and India joined the criticism of the project Libra

South Korea and India joined the criticism of the project Libra

According to the South Korean financial regulator, Libra cryptocurrency threatens the stability of financial systems. And Indian regulators doubt the viability of the project.

According to CoinDesk Korea, the Financial Services Commission (FSC) of South Korea is studying the question of “what happens if 2.4 billion Facebook users invest one-tenth of their bank deposits in Libra tokens.”

If such a scenario is implemented, the solvency of banks will decline, as will their credit reserves, which poses a threat to emerging markets due to the movement of capital from these countries.

FSC also expressed concern that this could trigger financial or currency crises as people move their national fiat currency to Libra. The regulator fears that the simplification of currency exchange and money transfers through Libra will limit the ability of central banks to control international capital movements. The effectiveness of monetary policy will also be limited if the Libra token is often exchanged for government currencies.

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The agency expressed concern that Libra could be used to launder money due to the lack of proper banking control. The regulator added that “large financial institutions such as Goldman Sachs or JPMorgan” refused to participate in the Libra project.

The report says that the project is a serious threat to the traditional banking industry. If a company such as Facebook buys a bond instead of making a bank deposit on customer funds, the financial condition of the bank may deteriorate. And if Libra makes essentially free international payments possible, South Korean banks will lose trillions in revenues from remittances.

The likelihood of successful commercialization of Libra is higher than for other cryptocurrencies, FSC notes. By offering financial services through its social networks with billions of users, such as Facebook, WhatsApp and Instagram, a firm can more easily guarantee the convenience and competitiveness of prices. FSC stressed that the report should “facilitate the understanding of the media” of foreign trends, and not indicate the official position of the regulator on Libra.

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A similar statement was made the other day
and the Central Bank of Japan. The bank’s report suggested that by tying Libra to more than one national currency, Facebook might try to avoid undue control by regulators in any one country.

India does not believe in Libra

The government of India and, in particular, the Minister of Economy of the country Subhash Garg, expressed doubts about the viability of the Steyblcoin Libra, developed by the social network Facebook.

“Facebook has not fully explained its cryptocurrency architecture. But be that as it may, it will be a private cryptocurrency and it is unlikely that it will fit our standards, ”Subhash Garg told the New Delhi newspaper on Saturday.

It is worth emphasizing that the central bank of India (RBI) is very skeptical about cryptocurrencies. He forbade testing cryptocurrency products in his sandbox. At the same time there are rumors that the authorities of the country may even ban digital currencies in India.

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Note that India is not the first country to oppose the Libra project. For example, more than three dozen public organizations in the United States recently signed an open letter to Congress with a request to suspend or prohibit the development of steylcoin. And the chairman of the Financial Services Committee of the US House of Representatives Maxine Waters (Maxine Waters) said that the authorities should prevent Libra from competing with the US dollar.

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