'One of Facebook’s co-founders has warned that the social network’s plans for a digital currency called Libra could allow corporations involved in the scheme to wield power over nation states.
Chris Hughes, whose role in the early days of Facebook has given him a net worth estimated at $430m (£340m), said global regulators should intervene to slow the progress of the cryptocurrency.
Facebook is developing Libra from a base in Switzerland, in partnership with 27 other corporations, including Mastercard, Paypal, Uber and Vodafone, collectively known as the Libra Association.
“If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies […],” said Hughes, co-chairman of anti-poverty campaign group the Economic Security Project.
“If global regulators don’t act now, it could very soon be too late.”
Mark Carney, governor of the Bank of England, offered a cautious welcome to Libra in his speech at the annual Mansion House dinner on Thursday night.
But in an article for the Financial Times, Hughes warned that the companies involved in the Libra Association, who have put $10m each into the project, would be able to “disrupt and weaken” nation states.
He warned that if enough people in emerging economies traded local currency for Libra, it would threaten governments’ ability to manage their own fiscal policy. Emerging governments should place a temporary ban on local banks and payment processors accepting the currency until the implications are thought through, he said.
“What Libra backers are calling ‘decentralisation’ is in truth a shift of power from developing world central banks toward multinational corporations and the US Federal Reserve and the European Central Bank,” said Hughes.'
Read more: Facebook co-founder warns against Libra cryptocurrency
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