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The Coming Libra Panics

Though the details of Facebook's recently announced digital currency and global payments system are still trickling out, the company's expressed intent raises serious concerns. By attempting to usher in a world of frictionless international currency flows, the company is setting the stage for severe and chronic capital-market volatility.

SYDNEY – Facebook’s unveiling of a new digital currency, Libra, has produced a tidal wave of skeptical, critical, and outright hostile responses. That is understandable, given Facebook’s reputation for carelessness about user data and personal privacy. Nonetheless, public angst won’t stop the company that once promised to “move fast and break things” from forging ahead – and possibly breaking entire national economies in the process.

We don’t yet have a full account of how Libra will work. For all its revolutionary hype, it could turn out to be just another variation on existing payment schemes. Apple Pay, PayPal, WeChat, and other services already each offer a basic payment method, including various convenience-enhancing features to lure customers and businesses. But, in substance, these services are merely an additional link in the chain of existing payment channels, ultimately connecting to the conventional banking system.

If Libra simply competes with these existing players, there could still be rich pickings for Facebook, not just transfer and foreign-exchange transaction fees, but also in terms of data collection. Amassing the payment and transaction details of the social network’s huge user base would be a glittering prize in itself.

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