Cryptocurrency project Facebook threatens the stability of the financial system, said the South Korean regulator.
In a note published at the end of last week, the South Korean Financial Services Commission (FSC) discussed what will happen "if 2.4 billion Facebook users around the world transfer a tenth of their bank deposits to Libra. According to the authors, such a scenario threatens the solvency of banks, as people will start to withdraw money from them, especially in developing countries.
In addition, the simplification of currency exchange and remittances with the launch of Libra is expected to undermine the ability of central banks to control capital flows internationally. FSC sees Libra's exchange for national currencies and the risks to the effective implementation of monetary policies in the country.
If Libra is not properly controlled, the cryptocurrency could become a money laundering tool, the regulator said. He also notes that "large financial institutions such as Goldman Sachs or JPMorgan" have refused to participate in the project.
FSC analysts view Libra as a serious threat to the traditional banking industry. Among other things, more attractive terms of money transfers with the help of Libra may have a negative impact on the revenue of banks.
According to FSC, Libra has a better chance of success in commerce than other cryptocurrencies. In particular, this can be facilitated by its integration into services such as Facebook, WhatsApp and Instagram.
The authors emphasize that their publication does not reflect the official position of the agency, but is intended only to inform the press about foreign trends.
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