Why is France’s finance minister at war with Facebook’s cryptocurrency?

French Finance Minister Bruno Le Maire only has harsh words for Libra, Facebook’s planned cryptocurrency. He wants to block its development in …
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Bruno Le Maire has found a punching bag: Libra, Facebook’s blockchain currency project. On Thursday September 13, the French Finance Minister expressed his opposition to the development of the digital currency in Europe, asserting that: “Our monetary sovereignty is at stake.”

“It’s a bit like Bruno Le Maire versus Libra Act II or Act III,” Loïc Sauce, an economist and cryptocurrency expert at the Institute of Higher Education in Marketing and Commerce (ISTEC), told FRANCE 24. Le Maire has been wary of the project since Facebook announced in June its plan to enable its nearly two billion users to pay and send money with its new currency, Libra.

Protecting the government’s domain

Initially circumspect, Le Maire has since become openly hostile to the plan. In addition to the risk to sovereignty, he has also cited the “danger to consumers” and “systemic risk” when talking about Libra.

“The minister’s reaction is understandable. The power to mint coins is historically the prerogative of the state. Now there is a group of private enterprises (the Libra Association the non-profit that will oversee the currency includes companies such as MasterCard, Uber, Spotify and Vodaphone) saying that their currency is more useful than those being employed in the territories where Facebook is present,” said Michel-Emmanuel de Thuy, digital director at 99 Advisory, a management consulting firm that specialises in the financial sector.

Le Maire hasn’t shied away from hitting Facebook where it hurts. By raising the issue of monetary sovereignty, Le Maire is insinuating that, if successful, Libra could interfere with monetary policies, de Thuy noted. If two billion people turn to Libra for a portion of their online transactions, “governments risk losing control over a significant part of financial flows, which would deprive them of information that is important for determining monetary policy,” said Nathalie Janson, an economist and bitcoin specialist at the Neoma Business School.

For the time being, Facebook is only considering using Libra to allow its users to transfer funds through its site or its messaging services (WhatsApp, Messenger) and to pay some of its merchant partners online. “But as technological progress accelerates, some countries may fear that this dematerialised currency will, in the not too distant future, be used to pay for everyday purchases, such as baguettes,” de Thuy said.

Facebook ‘too big to fail’

In a world where Libra is established as a currency that competes with the euro, the dollar, or other currencies, Facebook would become de facto “too big to fail”, like the banks that governments cannot let go bankrupt for fear of destabilising their entire economies. If Mark Zuckerberg’s Facebook empire were to collapse, the money that users had in their Calibra virtual portfolios managed by Facebook “would not be covered by a government guarantee, as can be the case with bank accounts, and the losses could affect the entire economy. This is the systemic risk that Bruno Le Maire is referring to,” Janson explained.

These worst-case scenarios remain hypothetical and Libra is still in the development stages. But Le Maire believes that prevention is better than cure. He is not the only one: American senators also strongly expressed their opposition to Facebook’s planned currency during the July 2019 hearing of David Marcus.

But figuring out how to respond is not easy. “Lawmakers could, at most, prohibit the payment of taxes in Libra and a court could sanction a contract that uses this currency as a means of payment,” Janson said. Sauce concurred. “Beyond that, the state’s means of intervention are very limited. If an American website, for example, decides to allow payment in Libra, France cannot prohibit it,” he said.

A public cryptocurrency to counter Libra?

Likely aware of those limits, Le Maire seems to be in favour of creating a digital currency managed by central banks a kind of public Bitcoin – in response to Libra. In an interview with La Croix newspaper (and without ever mentioning Facebook’s initiative) he explained that such a digital currency would have the advantage of making “transactions faster and cheaper” (because there would be fewer costs associated with cash management) and would facilitate access to financial services for “less bankable” populations. These are, almost word for word, the advantages Facebook cited when presenting Libra.

Le Maire drove the point home on September 13 by issuing a joint statement with his German counterpart, Olaf Scholz, urging the European Central Bank (ECB) to “accelerate its thinking on a public digital currency”.

“This idea of a public virtual currency has been discussed by central banks for years, but has never been a priority. In a sense, it can be said that the threat of the arrival of Libra has made the debate on the modernisation of the currency more pressing,” de Thuy said.

Such a currency would have the advantage over Facebook’s of “benefitting from the official guarantee of the central bank”, Janson said. But all of the European governments would need to agree on its creation, first in principle and then on the details. In other words, Facebook may have time to introduce its Libra and cash in before the ECB even has a chance to propose an alternative.

The battle between certain countries including France and Facebook for the future of currency could have an unintended victim: the pioneering spirit of cryptocurrencies. Both Libra and the public project proposed by Le Maire call for systems controlled by a central body; whether it is the Libra Association in Geneva or the ECB. These projects are far from the ideal defended by Bitcoin’s promoters, who want to establish a system that would be free of intermediaries, such as banks, and of organisations at the top of the pyramid. Whether it is Libra or a public digital currency that gains a foothold, either would be a blow to the revolutionary ambitions of the original cryptocurrency movement, which aimed to establish a new financial system, Janson concluded.

<span lang=”EN-US”><span>This article was adapted from the original in French.</span></span>

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Why is France’s finance minister at war with Facebook’s cryptocurrency?

On Thursday September 13, the French Finance Minister expressed his opposition to the development of the digital currency in Europe, asserting that: …
Advertising

Bruno Le Maire has found a punching bag: Libra, Facebook’s blockchain currency project. On Thursday September 13, the French Finance Minister expressed his opposition to the development of the digital currency in Europe, asserting that: “Our monetary sovereignty is at stake.”

“It’s a bit like Bruno Le Maire versus Libra Act II or Act III,” Loïc Sauce, an economist and cryptocurrency expert at the Institute of Higher Education in Marketing and Commerce (ISTEC), told FRANCE 24. Le Maire has been wary of the project since Facebook announced in June its plan to enable its nearly two billion users to pay and send money with its new currency, Libra.

Protecting the government’s domain

Initially circumspect, Le Maire has since become openly hostile to the plan. In addition to the risk to sovereignty, he has also cited the “danger to consumers” and “systemic risk” when talking about Libra.

“The minister’s reaction is understandable. The power to mint coins is historically the prerogative of the state. Now there is a group of private enterprises (the Libra Association the non-profit that will oversee the currency includes companies such as MasterCard, Uber, Spotify and Vodaphone) saying that their currency is more useful than those being employed in the territories where Facebook is present,” said Michel-Emmanuel de Thuy, digital director at 99 Advisory, a management consulting firm that specialises in the financial sector.

Le Maire hasn’t shied away from hitting Facebook where it hurts. By raising the issue of monetary sovereignty, Le Maire is insinuating that, if successful, Libra could interfere with monetary policies, de Thuy noted. If two billion people turn to Libra for a portion of their online transactions, “governments risk losing control over a significant part of financial flows, which would deprive them of information that is important for determining monetary policy,” said Nathalie Janson, an economist and bitcoin specialist at the Neoma Business School.

For the time being, Facebook is only considering using Libra to allow its users to transfer funds through its site or its messaging services (WhatsApp, Messenger) and to pay some of its merchant partners online. “But as technological progress accelerates, some countries may fear that this dematerialised currency will, in the not too distant future, be used to pay for everyday purchases, such as baguettes,” de Thuy said.

Facebook ‘too big to fail’

In a world where Libra is established as a currency that competes with the euro, the dollar, or other currencies, Facebook would become de facto “too big to fail”, like the banks that governments cannot let go bankrupt for fear of destabilising their entire economies. If Mark Zuckerberg’s Facebook empire were to collapse, the money that users had in their Calibra virtual portfolios managed by Facebook “would not be covered by a government guarantee, as can be the case with bank accounts, and the losses could affect the entire economy. This is the systemic risk that Bruno Le Maire is referring to,” Janson explained.

These worst-case scenarios remain hypothetical and Libra is still in the development stages. But Le Maire believes that prevention is better than cure. He is not the only one: American senators also strongly expressed their opposition to Facebook’s planned currency during the July 2019 hearing of David Marcus.

But figuring out how to respond is not easy. “Lawmakers could, at most, prohibit the payment of taxes in Libra and a court could sanction a contract that uses this currency as a means of payment,” Janson said. Sauce concurred. “Beyond that, the state’s means of intervention are very limited. If an American website, for example, decides to allow payment in Libra, France cannot prohibit it,” he said.

A public cryptocurrency to counter Libra?

Likely aware of those limits, Le Maire seems to be in favour of creating a digital currency managed by central banks a kind of public Bitcoin – in response to Libra. In an interview with La Croix newspaper (and without ever mentioning Facebook’s initiative) he explained that such a digital currency would have the advantage of making “transactions faster and cheaper” (because there would be fewer costs associated with cash management) and would facilitate access to financial services for “less bankable” populations. These are, almost word for word, the advantages Facebook cited when presenting Libra.

Le Maire drove the point home on September 13 by issuing a joint statement with his German counterpart, Olaf Scholz, urging the European Central Bank (ECB) to “accelerate its thinking on a public digital currency”.

“This idea of a public virtual currency has been discussed by central banks for years, but has never been a priority. In a sense, it can be said that the threat of the arrival of Libra has made the debate on the modernisation of the currency more pressing,” de Thuy said.

Such a currency would have the advantage over Facebook’s of “benefitting from the official guarantee of the central bank”, Janson said. But all of the European governments would need to agree on its creation, first in principle and then on the details. In other words, Facebook may have time to introduce its Libra and cash in before the ECB even has a chance to propose an alternative.

The battle between certain countries including France and Facebook for the future of currency could have an unintended victim: the pioneering spirit of cryptocurrencies. Both Libra and the public project proposed by Le Maire call for systems controlled by a central body; whether it is the Libra Association in Geneva or the ECB. These projects are far from the ideal defended by Bitcoin’s promoters, who want to establish a system that would be free of intermediaries, such as banks, and of organisations at the top of the pyramid. Whether it is Libra or a public digital currency that gains a foothold, either would be a blow to the revolutionary ambitions of the original cryptocurrency movement, which aimed to establish a new financial system, Janson concluded.

<span lang=”EN-US”><span>This article was adapted from the original in French.</span></span>

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Head of Libra Association Says Facebook’s Cryptocurrency Will Launch in 2020, Renminbi “Will …

Bertrand Perez, General Director of the Libra Association says Facebook has no plans to delay the launch of its global (crypto)currency network, …

Bertrand Perez, General Director of the Libra Association says Facebook has no plans to delay the launch of its global (crypto)currency network, despite outcry from global regulators.

“We are firmly maintaining our launch schedule, between the end of the first half of next year and the end of 2020,” Perez told online French news site Les Echos this week.

Facebook may be attempting to kowtow to powerful Western interests to help ease tensions if Perez comments to Les Echos are any indication.

In the interview, he assured the public, “the Renminbi will not be part of,” the basket of reserve currencies used to back Libra.

The comment is noteworthy.

In July, Chinese bankers convening at an academic conference at Peking University expressed serious concerns that Libra could upset the balance established by the International Monetary Fund’s Special Drawing Rights basket.

That basket currently includes the Chinese yuan, US dollars, Euros, Japanese yen and British pounds, and “serves as the unit of account of the IMF and some other international organizations.”

“If the digital currency (Libra) is closely associated with the US dollar,” said Wang Xin, director of the People’s Bank of China (PBOC), “it could create a scenario under which sovereign currencies would coexist with US dollar-centric digital currencies. But there would be in essence one boss, that is the US dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”

Perez’ interview did nothing to quell China’s concerns:

“(The Libra coin) is 99% fixed, and will include the dollar, euro, yen, pound sterling and Singapore dollar…(as well as) very short-term government dept (less than one year) of these countries.”

As well:

“We are still thinking about weightings, but the dollar should have a very significant weight, around half.”

The Libra Association plans to ongoingly adjust basket holdings based on performance, said Perez:

“If there is a disaster on a currency or crisis between now and the launch of the Libra, we could remove it from the basket, but this decision should be subject to a vote and taken by a two-thirds majority of the association’s members.”

Critics have warned rapid implementation of Libra payments across Facebook’s network of 2.4 billion users could have a destabilizing effect on the current global financial balance and/or could undermine sanctions or illicit finance controls.

Critics have also questioned Facebook’s ability to competently act as a central bank adjusting the taps on a massive currency system, especially given the company’s dramatic mishandling of customer data (ie. the Cambridge Analytica affair).

Other critics have argued that history has proven that currency systems are best managed by elected bodies- not private companies.

The Libra Association has 28 current (mostly corporate) members, and Perez told Les Echos the association plans to bring that number to 100 by next year.

Perez also claimed the association has received “many more than a hundred” requests to join.

Perez dismissed concerns regarding the potentially destabilizing effect of Libra, and said the system will circulate, “a hundred and probably no more than $200 billion (units).”

According to the current model, Libra coins will be “stablecoins” designed to maintain a consistent value via rebalancing of assets in the reserve basket.

The relatively insubstantial amount of Libras (initially?) makes concerns about destabilization overblown, said Perez:

“This is a low figure compared to the global financial markets for currencies. We are not going to become a new BlackRock. For this reason, we do not believe that the fears about the destabilizing nature of this reserve on the monetary policy of the central banks whose currencies are in our basket are well founded. It is their monetary policies that will influence Libra, through the basket, and not the other way around.”

Perez added that, “Facebook’s motto encourages governments to accelerate their own cryptomoney projects”:

“We are also assuring central banks that…we are not going to create money. We are not here to do the work of the banks.”

While the Libra network will not be fully implemented until at least next year, Perez claimed that, “(Libra) is about to obtain…approval as a payment system in Switzerland.”

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France, Germany oppose Facebook’s Libra, back public cryptocurrency

The criticism came as the European Central Bank said it was working on a long-term plan to launch a public digital currency that could make projects …

France and Germany said on Friday that Facebook Inc’s Libra currency posed risks to the financial sector that could block its authorisation in Europe, and backed the development of an alternative public cryptocurrency.

The criticism came as the European Central Bank said it was working on a long-term plan to launch a public digital currency that could make projects such as Libra redundant.

Virtual currencies pose risks to consumers, financial stability and even “the monetary sovereignty” of European states, France’s finance minister, Bruno Le Maire, and his German counterpart, Olaf Scholz, said in a joint statement issued at a meeting of euro zone finance ministers in Helsinki.

“France and Germany consider that the Libra project, as set out in Facebook’s blueprint, fails to convince that those risks will be properly addressed,” they said.

The 19-country euro zone bloc is united in pursuing a tough regulatory approach should Libra seek authorisations to operate in Europe, officials said at the meeting.

It is also considering a common set of rules for virtual currencies, which are currently largely unregulated.

The currency union has worked in past years on several plans to make digital payments cheaper and faster, but none of them has properly taken off so far.

The Libra Association, a 28-member organisation Facebook is setting up in Switzerland to manage the currency, said it welcomed the feedback.

Members “are committed to working with regulatory authorities to achieve a safe, transparent and consumer-focused implementation of the Libra project,” Dante Disparte, the group’s head of policy and communications, said in a statement.

WAKE-UP CALL

Plans unveiled in June by US social media giant Facebook to launch its own digital currency, Libra, for payments among its hundreds of millions of users in Europe and around the world have triggered a rethink.

Libra was “a wake-up call”, European Central Bank (ECB) board member Benoit Coeure told a news conference in Helsinki after a meeting of euro zone finance ministers.

He said Libra had revived efforts to widen the uptake of an ECB-backed project for real-time payments in the euro zone, known as TIPS. The project, launched last year, has been met with caution by banks.

“We also need to step up our thinking on a central bank digital currency,” he added, unveiling a so far little-known plan.

An ECB official said the project could allow consumers to use electronic cash, which would be directly deposited at the ECB, without need for bank accounts, financial intermediaries or clearing counterparties.

These actors are all needed now to process digital payments, but may no longer be necessary if the ECB took over their functions, slashing transaction costs. Libra’s plan also would do without financial intermediaries.

Work on the ECB project started before the launch of Libra and could last months or even years, Coeure said. The technical feasibility remains to be seen and opposition from banks is likely. He will present a report on virtual currencies to G7 finance ministers next month, officials said.

Le Maire said one of the purposes of this initiative was to make sure that banks reduce fees on international payments.

“We encourage European central banks to accelerate work on issues around possible public digital currency solutions,” Le Maire said in the joint statement with Germany’s Scholz.

LEGAL LIMBO

While euro zone ministers seem united on a tough regulatory line on Libra, it is less clear whether they agree to set up common rules for virtual currencies.

The EU’s financial services commissioner, Latvia’s Valdis Dombrovskis, is always careful to underline that cryptoassets are an opportunity as much as a threat.

The EU does not have specific regulations on cryptocurrencies, which until Libra was unveiled had been considered a marginal issue by most decision-makers because only a tiny fraction of bitcoins or other digital coins are converted into euros.

New EU-wide rules came into force last year to increase checks on virtual currencies’ trading venues with the purpose of reducing risks of money laundering and other financial crime.

But apart from that, virtual currencies move in what is largely a legal limbo in the EU, as regulators have not yet managed to agree on whether to treat them as securities, payment services or currencies in themselves – the latter option being ruled out by most.

In the absence of specific regulations, EU officials are assessing whether existing rules governing financial instruments could apply, but have so far reached no conclusion.

When asked whether Libra would need a licence to operate in the EU, a spokeswoman for the European Commission told Reuters that an authorisation would likely be necessary. But “with the publicly available information on Libra, it is currently not possible to say which exact EU rules would apply,” she added.

In Switzerland, Libra is applying for a payment service licence, although it could face rules that typically apply to banks, regulators in the non-EU Alpine state said on Wednesday.

The EU-wide legal vacuum has paved the way for smaller states to fill it. Tiny Malta, which already hosts the bloc’s largest online gambling industry and an outsized finance sector, has devised its own framework to attract virtual currency operators.

It is unclear whether Malta and other smaller EU states would agree with Le Maire’s tough stance on Libra and cryptocurrencies.

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Tips to Maximize Returns from Cryptocurrency Investments

If you are a new Bitcoin investor seeking ways to maximize returns from cryptocurrency investments, then you’re on the right path. In your attempt to get …

If you are a new Bitcoin investor seeking ways to maximize returns from cryptocurrency investments, then you’re on the right path.

In your attempt to get familiar with this investment route, you probably asked yourself the following questions: Was there a Bitcoin bubble? Have I joined too late? Will I make blunders and most importantly, what are the best tips to succeed in this emerging investment niche?

Well, you’re not alone. Many other investors are keen on venturing into this largely unchartered financial territory. You might also have noticed the prolonged bear market cryptocurrencies faced in 2018.

A bear market is a situation where prices of securities may drop by at least 20 percent from a recent high. The drop may be as a result of widespread negative investor sentiment or pessimism on the part of the trader. The last time a bear market affected Bitcoin was in 2011.

Novice Investor

Most investors are familiar with stocks, bonds, and securities. However, cryptocurrency trading is different from stock market trading. Crypto trading is very different from the traditional form of trading.

Some of the major cryptos can be quite expensive with 1 Bitcoin pushing more than USD 10,000. If you’re pondering on how to invest with little money, stocks still might be a more forgiving avenue for a novice investor. Unlike the stock market, cryptocurrency trading happens 24/7. A novice investor should always compare and contrast investing options to make informed decisions.

What is Cryptocurrency Trading?

Cryptocurrency trading is the exchange of cryptocurrencies. Examples of cryptocurrencies are Bitcoin and Altcoin. You can buy or sell one cryptocurrency for another. You can exchange a Bitcoin for a U.S. dollar or a Euro.

Types of cryptocurrencies

Basically, there are three major types of cryptocurrencies:

  • Bitcoin

Bitcoin first appeared in 2009 and is the most widely circulated cryptocurrency. It uses what is called peer-to-peer technology for decentralized control, making it possible to trade without the centralized control of a central bank or government authority. The store of value for Bitcoin is the blockchain. This is a public ledger for all its transactions.

  • Litecoin

Litecoin was created in 2011 and resembled Bitcoin in appearance. But it possesses a faster processing speed than Bitcoin due to its Segregated Witness technology.

  • Ethereum

Ethereum came last but has surpassed Litecoin in popularity and is currently the most popular cryptocurrency after Bitcoin. It boasts of fast processing speeds, thanks to its smart contracts: and its digital “if-when” agreements.

Investing a Small Portion of Your Portfolio

According to Mike Alfred of Digital Assets in Denver,

Bitcoin is the most important but misunderstood digital asset of our lifetime.

He says that every investor needs to own at least 5 percent of this digital asset.

He is joined by David Tawil, the president of Maglan Capital, who says investors need to allocate between 2 and 3 percent in crypto assets.

Both insist that technology has disrupted most businesses and that cryptocurrency hasn’t been spared. A growing class of investors, including regular folks, regulators, and advisors, strongly believe that Bitcoin is the currency of the future. Just recently, Max Keiser, the CEO and co-founder of Heisenberg, said that Bitcoin could have averted the 9/11 attacks had it come into existence 10 years before.

Shown Disdain

Mainstream banks and several leading investors have shown disdain on the onslaught of cryptocurrencies. However, some investors believe in the digital currency’s extraordinary rise and potential to replace investment trading as we know it.

And for those crypto investors looking to maximize returns from cryptocurrency investments, here are a few tips:

  • Build an investment strategy

Experts recommend investing a quarter of your funds in the most popular coins in the order of Bitcoin, Ethereum, XRP, and Litecoin. These are the coins whose prices change very frequently. So, limit your investment in these coins to not more than 30 percent.

  • Trading during the day

If you want high returns in the short term, then try to trade during the day. The trick is to invest in crypto and then sell as soon as the price goes up. Some cryptocurrencies can be highly volatile and suited to this kind of trading. If you plan to trade during the day, ensure not to invest more than 15 percent of your portfolio since the risk is very high in this market.

  • Invest in Altcoins

Altcoins are created as an alternative to Bitcoin, and some popular ones include NEO and Titan. Experts say that Altcoins can easily outperform Bitcoin and Etherium because they have a strong foundation coupled with excellent growth potential.

Last but not least, don’t forget to:

  • Take your profits whenever possible
  • Focus on the big wins
  • Keep updating your portfolio at least every month

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