While speaking on a panel with the CEO of Morgan Stanley, the CEO of JP Morgan, Jamie Dimon said that Facebook Libra would never happen. He said that while the idea was neat, it would never be actualized. The two CEOs were speaking at a conference in Washington, which was organized by the Institute of International Finance.
A Nod to the JPM Coin
While talking about Facebook Libra, Jamie Dimon also briefly mentioned the JPM Coin. He noted that Facebook was not the first major company to launch a stablecoin. JP Moran’s stablecoin has not received as much attention as the Facebook Libra project. The reason for this is that the JPM Coin is not used by the masses. Rather, institutions use it to exchange value between them. This helps to lower costs while ensuring that transactions can take place much faster.
Stablecoins, like the proposed Facebook Libra, are digital currencies that are backed by a major fiat currency or a basket of currencies. They are used to facilitate rapid transactions between institutions faster than is traditionally possible. The coins are better suited for this purpose since their value does fluctuate wildly like that of BTC and ETH.
Facebook Libra Challenges
Facebook claims its Libra coin will be backed by a basket of major fiat currencies as well as short-term bonds, held by the Libra Association, to maintain its value. Despite a lot of criticism globally, Facebook has vowed to push ahead with the project.
Regulators have expressed concern about the destabilizing effect of the Libra coin on the financial system if it is launched. Besides that, Facebook’s poor track record when it comes to handling consumer data has not helped it to win over supporters. Additionally, Facebook has been accused of allowing its platform to be used for nefarious actions including hate speech and spreading fake news. For instance, Facebook was accused of being complacent is spreading false stories that led to massive loss of life in Myanmar.
Regulators are also afraid that if most of its over two billion users adopt the Facebook Libra coin, local coins in small nations could be rendered redundant. As a result, they might see sudden devaluations, which could negatively affect local economies. Additionally, regulators are worried that Facebook Libra could open up new channels for illicit activities such as terror financing.
The project recently suffered a major setback when a quarter of its founding members announced an abrupt departure from the project. Those who left include major companies such as Stripe, Visa, and Mastercard. It is believed that regulators might have played a role in urging the payment companies to leave the Libra Association.
Dimon’s Words Carry A Lot of Weight
Jamie Dimon is the head of one of the largest banks in the world. Besides that, he often works with regulators and lawmakers all the time. As a result, his sentiments should be taken seriously. The JP Morgan CEO added that Facebook Libra might remain nothing more than an idea on paper for the next few years.
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