(June 27): The Monetary Authority of Singapore has held discussions with Facebook Inc. about its plans for a new cryptocurrency, though the regulator still sees significant obstacles in the way of the social media firm’s project.
Despite the potential benefits of Libra, concerns raised about the way it would function are “not trivial,” MAS Managing Director Ravi Menon said Thursday at a media briefing.
“The key challenge is to figure out the nature of the beast,” Menon said. “What is it more like and which box we can put it into. At this point we are not sure yet.”
Menon joins a number of other guardians of the global financial system in expressing reservations about Facebook’s plans to move into the heavily regulated finance industry via cryptocurrencies. French Finance Minister Bruno Le Maire has said it is “out of the question” that Facebook’s digital money should compete with sovereign currencies.
However, Menon also noted the potential benefits of Libra, which could provide a cheap payments system and help bring the unbanked into the mainstream financial system.
The current cross-border payments system is “expensive, inefficient, sometimes risky,” Menon said. “Libra offers a very interesting proposition that could help to address” those issues, he added.
But more information is needed to establish the potential advantages, Menon said, noting that there are many other experiments underway to address shortcomings in cross-border payments.
“At this point it’s not clear whether it offers a distinctly superior proposition to existing electronic payment mechanisms,” he said. “We need to understand how exactly it’s going to work” including the economics of the project as well as security and privacy issues, he added.