THE MEETING OF IDEAS. Economist Jérôme Mathis analyzes the promises and dangers of "
libra”, the future virtual currency of the Web giant.
Grandstand. Unbanked populations in some parts of the world, including Africa, are waiting with
looking forward to a cryptocurrency easily usable from low-speed mobile phones and whose
course is not as unstable as that of bitcoin. This demand could well be satisfied by the
cryptocurrency that Facebook is currently developing: the "libra".
Despite the discontent of central bankers and some governments, cryptocurrencies continue to
gain ground. Only a few years ago, they held the attention of only a few enthusiasts
of computing in search of protocols capable of carrying out monetary transactions without going through
the banks. Today, in some places, they offer real alternatives to currencies
domestic and upset the monetary authorities. So much so that their capitalization is already close to a quarter of the
total amount of coins and banknotes denominated in euro.
The most popular of them, bitcoin, was a great success but is currently struggling. Same
while it probably has a bright future ahead of it as a speculative tool, it is only a poor means
of payment. Its volatility is its Achilles heel. His course is on a roller coaster because he is not
governed by no central bank and is not backed by any asset (currency, commodity or security).
debt). It still represents a spare wheel for populations victims of inflation at two or three
figures (Angola, Egypt, Ghana, Malawi, Mozambique, Nigeria, Democratic Republic of Congo, Sierra
Leone, South Sudan, Sudan, Zimbabwe…), but it is nonetheless a spare wheel which is
randomly inflates and deflates with erratic movements in supply and demand
world.
A regulatory battle, but also of opinion
It is this fluctuation problem that Facebook intends to solve by putting a cryptocurrency on the market.
backed by a basket of currencies such as the dollar or the euro. The social network, which in less than five years has
reached a market capitalization exceeding that of the three largest jewels of French industry combined
(LVMH, L'Oréal and Total), plans to mobilize the necessary means to achieve this.
In this adventure, he is accompanied by some twenty multinationals, including those participating in the
change in our consumer behavior, such as Uber, Spotify and eBay, but also the giants of
payment security: Visa, MasterCard and PayPal. This consortium is committed to bringing together
colossal reserves intended to counter market operations, or even to respond to possible attacks
speculation, as central banks do on a daily basis, to guarantee the stability of the currency. the
Libra therefore aims to be the first credibly stable private digital currency.
This project has been scrutinized by the American regulatory authorities. An arm of
iron with the Congress, the Senate, the Central Bank (Fed) and the stock market policeman (SEC), because we do not launch
not in nature a new currency capable of unbalancing the international financial system without
show their credentials at all levels. Facebook has already reassured on the means of traceability
offered by its cryptocurrency, whether in terms of tax evasion, money laundering or
terrorist financing.

Other points are now on the table, around the role that we intend to confer on this
currency in the financial sector. A bitter regulatory battle will be played out over the next few months, but also
of opinion. It is not impossible that the initial agenda, fixing the circulation of Libra by 2020, is
pushed back. Otherwise, fifteen countries of the Economic Community of West African States
West (ECOWAS) could well experience two monetary revolutions that year: one with the
in physical circulation of the eco, which aims to get rid of the CFA franc (a currency inherited from the colonial era);
the other with that, virtual, of libra.
Nightmare for some, gold mine for others
To win public opinion, Facebook raises issues related to the deployment of payment solutions
in developing countries. A third of the world's population is unbanked, double
in sub-Saharan Africa. However, the majority have access to a mobile phone. mobile banking
increased in recent years, to the point that many urban dwellers in Africa regularly send
money from their phone to a relative in a rural area.
The specificity of the libra is that it is intended to be used from mobile applications like WhatsApp or
Messenger, both properties of Facebook, particularly present in India and Africa and
suitable for low-speed Internet connections. Traders from countries who do not know the
payments by credit card are applicants for dematerialized payment solutions if this may limit
exposure to theft of their daily recipe. An argument to which the NGO partners of the
project. One of them, Women's World Banking, is convinced by the potential
to increase women's financial inclusion.
Every year, the African diaspora sends more than 60 billion dollars (over 54 billion euros) to
the continent. At the top of the beneficiary countries are Nigeria, Egypt, Morocco, Ghana and Algeria.
A country like Liberia collects more than a quarter of its GDP this way. Libra plans to
compete with the financial intermediaries that currently occupy the field (Western Union,
MoneyGram…). The objective is also to simplify the transfer of money across the globe, to make it
as easy as sending an email.
To convince the American authorities, Facebook argues the market issues related to the crossing
payment information with personal data collected on social networks. In addition to
continuously geolocate users, to know their habits, their tastes and the identity of their
loved ones, Facebook wants to learn what they do with their money. Orwellian nightmare for some,
real gold mine for others. It is not unlikely that the American legislator will be seduced by
this business opportunity. At the time of the development of the Internet, he had been able to show himself more
accommodating than the European authorities. He doesn't regret it. Thirty years later, all the GAFAs (the
giants Google, Apple, Facebook and Amazon) are American.
There are also issues related to surveillance, even espionage. Better for the legislator
that the company that collects all this information is American, so as to have access to it on simple
court or government decision. The headquarters of the consortium is expected in Geneva, Switzerland. That
location outside US jurisdiction could also be used in the negotiation phases to
to come.
Hundreds of millions of potential customers
The authorities will thus have to reconcile economic and geostrategic issues, on the one hand, and
monetary regulation and personal data protection constraints, on the other hand. All on background
active campaign of the banking lobby, which does not intend to let itself be outdone without reacting.
The banks are concerned about this project in more ways than one. There is something. In developed countries, if
adults do not seem overly interested in yet another means of payment that would come
add to an already extensive arsenal (bank card, transfers, checks, cash, etc.), young
generations do not hear it that way. In the near future, some forms of payment,
such as checks or cash, may well give way to settlement in cryptocurrency by
mobile phone.
In emerging countries, the long-term challenges are also very real. If economic growth
world continued at this rate, the unbanked populations could well access, within one to two
decades, to the current lifestyle of the lower middle classes. Hundreds of millions of customers
Potentials could thus see their payment habits shaped by Facebook, even before the
traditional banks don't come their way.
No one knows exactly under what conditions Libra will be deployed in Africa. What is not on time
current situation that a project can still change its name, form, or even be supported by other actors if certain
members of the current consortium withdraw by then. What is certain is that the technological transformation of dematerialized payment has definitely begun and that the African monetary authorities will have to
learn to deal with cryptocurrencies from other continents.
Jérôme Mathis is professor of economics at Paris-Dauphine University, author of the blog La Finance au cœur
of our lives.

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