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Portugal expresses concerns about Facebook’s Libra

Pedro Febrero

As reported by the Portuguese news media, Expresso, the Portuguese Finance Secretary expressed a great deal of concern, much like politicians in countries like Germany and France, over Facebook’s Libra project.

In a recent interview, Mourinho Félix said: “Portugal shares the concern of other European countries” regarding Facebook cryptocurrency.”

As previously described by many cryptocurrency analysts like Mati Greenspan, Saifedan Amous and Anthony Pompliano, corporate cryptocurrencies could in fact challenge the sovereignty of national currencies.

If people start using digital currencies, such as Libra, as a means of exchange (MoE) and a store of value (SoV), how could governments and central banks affect the economy with monetary policies?

I argue that corporate coins could render many monetary and fiscal policies useless.

As such, governments everywhere – but especially in Europe where regulations are much welcomed – are starting to take notice of the possible impact of heavily marketed cryptocurrencies.

Remember the ICO boom of 2017?

Now imagine the impact a digital currency easily accessed by at least two billion people would have on the currency markets. Not only cryptocurrency, but fiat currencies as well. The power and influence of central banks would definitely be put in check.

Portugal shares European concerns

As shared by the Portuguese Finance Secretary during an interview, the risk of Libra is that it could limit the scope of traditional monetary policy tools. We shouldn’t forget Libra is, effectively, a stable coin backed by assets that include Euros and US Dollars.

As such, the stable currency has the potential to rapidly impose itself in economies with high inflation rates, weaker institutions or where the financial sector is poorly developed.

Ricardo Mourinho Félix added that “it remains to be seen whether Libra will advance and, if so, whether it will be a means of payment, a financial instrument or a market structure, however, it is clear there are high risks and that the phenomenon has a systemic dimension”.

The Secretary of State for Finance stressed that “Portugal shares the concern of other European countries about Libra and awaits the recommendations of the G7 working group on stable currencies”.

Will Europe further regulate stable coins?

Although there isn’t a final verdict, as I expressed in this article, European regulators have a tendency to over-regulate markets, effectively making them inefficient.

I’ve shared plenty of examples in the past, but a recent case are both articles 11 and 13, approved by the EU during 2019, that make internet copyrights impossible to cope with.

For instance, under this new EU guidance memes could effectively be under the copyright protection law. That simply makes no sense to me since memes belong to the internet – they’re much like gifs, a creation for the world that isn’t monetised.

Hence, I expect stable coins to eventually be heavily regulated.

Safe trades!

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