On Monday, The Bank for International Settlements hosted a meeting in Basel, Switzerland to discuss the issue of stablecoins like those proposed by Facebook and J.P. Morgan. After the meeting, Calibra CEO David Marcus took to Twitter to try to allay any concerns policymakers might have about Libra’s potential for threatening the monetary sovereignty of the modern nation-state.
Marcus addressed that risk in a series of tweets:
“About monetary sovereignty of Nations vs. Libra: Recently there's been a lot of talk about how Libra could threaten the sovereignty of Nations when it comes to money. I wanted to take the opportunity to debunk that notion. Libra is designed to be a better payment network and system running on top of existing currencies, and delivering meaningful value to consumers all around the world.
Libra will be backed 1:1 by a basket of strong currencies. This means that for any unit of Libra to exist, there must be the equivalent value in its reserve. As such there's no new money creation, which will strictly remain the province of sovereign Nations.
We also believe strong regulatory oversight preventing the Libra Association from deviating from its full 1:1 backing commitment is desirable. We will continue to engage with Central Banks, Regulators, and lawmakers to ensure we address their concerns through Libra's design and operations.”
The Financial Times had reported the planned meeting Sunday and noted that representatives from Facebook and J.P. Morgan were expected to attend. J.P. Morgan is currently developing its own stablecoin digital currency, JPM Coin, which is expected to be pegged to the value of the U.S. dollar.
Marcus’ comments on Twitter were an apparent response to recent concerns that private stablecoins could negatively impact the stability of sovereign national currencies and disrupt the global financial system. Benoit Coeure, who chaired Monday's meeting, suggested that Facebook, J.P. Morgan, and other stablecoin promoters may have a long road ahead of them as they try to satisfy regulators’ concerns:
“As a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system. They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.”