Facebook libra
Images: Shutterstock

Chris Hughes, the co-founder of Facebook, thinks that the newly unveiled cryptocurrency Libra will have a “frightening” impact on the economy — by shifting power from central banks to corporations.

Earlier this week, Facebook unveiled its global digital coin, which will be managed by the Libra Association and circulated through a wallet named Calibra.

Hughes says even a modestly successful Libra can transfer control of monetary policy from central banks to private companies like Visa, Uber, and Vodafone.

“Inevitably, these companies will put their private interests — profits and influence — ahead of public ones,” writes the co-founder.

Even though “move fast and break things” was their mantra in the initial days of Facebook, Hughes says that this approach is inappropriate when it comes to the global financial system.

He believes Libra has the “potential to disrupt and weaken nation states by enabling people to move out of unstable local currencies.”

Eventually, it could turn into a “currency denominated in dollars and euros and managed by corporations” and there would be no turning back from there.

Lesser the amount of local currency a country’s citizens hold, it decreases the power of the national central bank to set monetary policy. This, in turn, will make it harder to regulate the local economy in times of economic stress.

Therefore, Libra will eventually “disrupt and weaken nation states” by forcing people to discard unstable local currencies and adopt a currency that is denominated in dollars and euros and managed by corporations.

Hughes cited Greece’s economic problems as an example. The government’s lack of control over the local currency is proof of how local economies can be damaged in such cases.

He said that “if global regulators don’t act now, it could very soon be too late.”

The Libra project is slated to launch in the first half of 2020 and can be used to purchase products, transfer money internationally and make donations.

Also Read: Confirmed: Facebook’s ‘Calibra’ Crypto Wallet Won’t Launch In India