Facebook's Libra: A quick assessment (22 June 2019)

Libra is a fintech innovation seriously challenging banking, leveraging real problems of financial inclusion and anachronistic banking, the network of FB and associated partners, and blockchain technology. It is contributing to mass crypto adoption. It doesn’t piggyback on traditional card system, but is debit card in nature - little to do with bitcoin and (its) decentralized blockchain(s). It is a centralised enterprise, potentially a gigantic systemically relevant fund manager (100% backup), supporting government debt, and with an option to operate fractional reserve. Even if Libra technically managed to reconcile highest blockchain consensus security with full decentralization and VISA-like performance, it wouldn’t really have interest in moving beyond the 100 nodes, as this would dilute RoE. Libra’s regulatory ride will be tortuous and long. Regulators emphasize “mass regulation before mass adoption”. Anticipating systemic importance, they will hold it against the highest prudential standards. The importance of central governance and FB data privacy track record add to the concerns. Yet, taking the history of tech change and economic growth as guide, regulators should keep an open mind.