Monopoly Money: Facebook Executive Responds to Regulatory Concerns over Proposed Cryptocurrency

A Facebook executive responded to regulatory concerns over the company’s proposed blockchain-based cryptocurrency, “Libra.”

In testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Facebook subsidiary Calibra executive David Marcus emphasized that Facebook will not release Libra until it has addressed regulatory concerns and received the necessary approvals.

Mr. Marcus clarified that, among other things:

– Libra is like cash and will serve as a payment tool, “not as an investment”;

– Libra Reserve will be subject to its respective government’s monetary policies;

– Libra Association does not intend to compete with sovereign currencies or engage in the “monetary policy arena”;

– Facebook will hold a leadership role until the Libra network launches, after which Facebook will have the same voting power as all other members;

– Libra Association will be supervised by the Swiss Financial Markets Supervisory Authority and intends to register as a money services business with the Financial Crimes Enforcement Network;

– Libra will adhere to anti-money laundering and Bank Secrecy Act requirements; and

– Libra Association “cannot . . . and will not” monetize data from the blockchain.

Mr. Marcus outlined the structure and management of Calibra, established “to provide financial services using the Libra Blockchain.” Mr. Marcus distinguished Libra and Calibra, saying that the entities are separate and that they will not exchange individual customer data. Additionally, Mr. Marcus noted that, with exceptions, Calibra will not share customers’ accounts and financial information with Facebook, and that the information will not be used for ad targeting. Facebook said that Calibra will increase user activity on Facebook, thereby generating greater advertising revenue.

COMMENTARY / STEPHEN LOFCHIE

The principal point of the statement was to assert that Libra will be operated in full compliance with all relevant national laws. As to one of the key questions concerning whether Libra coins might be a “security,” Mr. Marcus stated that it would not be because “Libra is a payment tool, not an investment. People will not buy it to hold like they would a stock or bond, expecting it to pay income or increase its value. Libra is like cash.”

Notwithstanding Mr. Marcus’ assertion, Libra raises a number of very difficult (or at least unresolved) legal questions. Unlike “stablecoins” that are completely linked to the value of a single currency (they are just representations of bank deposits), it is intended that Libra will be backed by a reserve of a number of different currencies. The relative proportions of various currencies to be held in the reserve is uncertain. The fact that Libra is not simply a virtual dollar means that, at least under current law, each purchase and sale of a Libra could be a taxable event for U.S. taxpayers. There are also securities law issues raised by, for example, the fact that the determination of the assets to back a Libra will involve discretion as to the purchase and sale of securities.

From a business standpoint, Mr. Marcus suggests that the real market for Libra may be outside of the United States or of any developed economy. Rather, the market for Libra could be principally in countries where the local currency is volatile or where there is significant uncertainty as to the soundness of the banking system. That actually makes a good deal of sense. Consumers in the United States may not have much use in their daily lives for a currency tied to a global basket of other currencies and securities that fluctuates each day, even if not that much, against the dollar. On the other hand, consumers in Venezuela might find such a currency very appealing.

CFS Monetary Measures for June 2019

Today we release CFS monetary and financial measures for June 2019. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.8% in June 2019 on a year-over-year basis versus 4.6% in May.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Jun19.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’

CFS Monetary Measures for May 2019

Today we release CFS monetary and financial measures for May 2019. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.5% in May 2019 on a year-over-year basis versus 4.4% in April.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_May19.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’

CFS Monetary Measures for April 2019

Today we release CFS monetary and financial measures for April 2019. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.4% in April 2019 on a year-over-year basis versus 4.2% in March.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Apr19.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’

Hanke on Measuring Money / CFS Monetary Measures for March 2019…

In addition to the monthly CFS monetary and financial release, CFS special counselor Steve Hanke discusses the need for relevant data and benefits of broad money measurements in the latest World Economics Journal (see http://www.centerforfinancialstability.org/research/HankeOnMeasuring.pdf.)

Today we release CFS monetary and financial measures for March 2019. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.4% in March 2019 on a year-over-year basis versus 4.5% in February.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Mar19.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’

CFS Monetary Measures for February 2019

Today we release CFS monetary and financial measures for February 2019. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.5% in February 2019 on a year-over-year basis versus 4.4% in January.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Feb19.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’

CFS Monetary Measures for January 2019

Today we release CFS monetary and financial measures for January 2019. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.4% in January 2019 on a year-over-year basis versus 4.2% in December.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Jan19.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’

CFS Monetary Measures for December 2018

Today we release CFS monetary and financial measures for December 2018. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.6% in December 2018 on a year-over-year basis versus 3.9% in November.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Dec18.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’

CFS Monetary Measures for November 2018

Today we release CFS monetary and financial measures for November 2018. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.0% in November 2018 on a year-over-year basis versus 4.1% in October.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Nov18.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’

CFS Monetary Measures for October 2018

Today we release CFS monetary and financial measures for October 2018. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.1% in October 2018 on a year-over-year basis, maintaining the same growth rate as in September.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Oct18.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) {ALLX DIVM }
2) {ECST T DIVMM4IY}
3) {ECST} –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) {ECST S US MONEY SUPPLY} –> From source list on left, select ‘Center for Financial Stability’