Mark Zuckerberg, who testifies before the United States Congress this Wednesday, plans to deliver a clear message that Facebook is ‘not the ideal messenger’ for the Libra cryptocurrency. However, Zuckerberg will also acknowledge the fact that if the US does not utilize the project, it may lose its ‘financial leadership’ to China, which actively develops its own national cryptocurrency.
While the original launch date for Facebook’s cryptocurrency is set for mid-2020, Zuckerberg promises in a prepared testimony that Libra will be delayed until all regulatory concerns are fully addressed, solved, and presented into law. Adding onto that, the testimony reads that Libra will not challenge traditional currencies or monetary policies, but will instead be used to facilitate money transfers.
Read the full testimony here.
Due to Facebook’s previous malicious use of private user data, political and economic spheres are worried about the implication of the tech giant becoming a finance giant as well. In that regard, Zuckerberg was invited to testify in front of the House Financial Services Committee, where he will be questioned over the company’s entrance into financial waters.
As the CEO’s prepared testimony is already released, we see that Zuckerberg plans to acknowledge all critics that his company may receive, while at the same time prompting U.S. representatives that the project might improve the lives of financially isolated people by implementing an easier mechanism for transferring money.
Concerning the eventual launch, Zuckerberg states in his testimony that Libra will not be launched anywhere in the world until American regulatory bodies are satisfied. ‘If healthy skepticism becomes all-out hostility, we’ll put a lot of progress at risk,’ stated Zuckerberg when referring to the world’s push to prevent the launch of Libra.
China challenges US financial leadership with CBDC project
Furthermore, Zuckerberg will promptly warn Congress of the progress that other nations such as China are making. Research since 2014 and developed since 2018, the People’s Bank of China (PBoC) had an active approach toward the cryptocurrency sector, banning major aspects nationwide while applying development for internal purposes.
Referred to as a Central Bank Digital Currency (CBDC), China’s project might not just protect its own monetary policy but may represent a threat to the U.S. if a rival Digital Dollar is not presented.
‘While we debate these issues, the rest of the world isn’t waiting. China is moving quickly to launch similar ideas in the coming months… If America doesn’t innovate, our financial leadership is not guaranteed,’ wrote Zuckerberg in his prepared testimony.
As made public by some of the PBoC’s deputy director’s previous remarks, the Chinese institutional cryptocurrency project may launch as soon as November 2019, making it one of the first state-sponsored global cryptocurrency projects. Even in the case that China delays the launch for a few more months, the CBDC will still launch months ahead of Libra, whose future is still unknown.
While the U.S. government might in its own right not sponsor a corporate-backed global digital currency, it may decide to create a digital dollar, which would effectively digitalize the traditional flow of money. In that regard, the traditional finance system would be saved, while a far more digital efficient structure would replace legacy systems that make the transfer of money far more difficult than it should be.