The well-known economic historian Barry Eichengreen believes that stablecoins are either too fragile or too expensive, to emerge as a dominant monetary form in the financial world. The UC Berkely professor argued that Facebook’s planned Libra stablecoin faces too many “insoluble” problems, and too much resistance from governments to ever launch. The Economist told the Unitize conference on July 10 that Libra is an interesting idea that will never see the day of light.
“The stablecoin sector is largely ignorant of monetary economics and history.”
The economic historian said that the stablecoin sector is largely ignorant of monetary economics and history. He further noted that his economic work had led to invitations “to a series of lunches at excellent San Francisco restaurants with the founders and funders of prospective stablecoins. He said that in his conclusion, his luncheon companions knew all about blockchain, but they didn’t know much about monetary economics, emphasizing that they had been unaware of past speculative attacks on pegged exchange rates. In his opinion, stablecoins are fragile and prone to attack and collapse if they are only partially backed or collateralized with actual dollars or dollar bank balance.
Facebook insists on a 2020 launch.
The Libra Association is working hard to get Libra off the ground this year, and for that to happen, the association has made several changes to the stablecoin project. The Switzerland based association has made some changes to its white paper to appease regulators across countries. However, some countries remain adamant about not allowing Libra into their country, as they believe the stablecoin could threaten the country’s financial sovereignty. Since Facebook has a bad track record of handling users’ privacy, the social media giant has tried to distance from the crypto project over the past few months. A Facebook official said that it’s only a part of the Libra Association and does not lead the project.