ECB does the right thing and speaks up over Facebook's proposed currency dictatorship - FinanceFeeds

ECB does the right thing and speaks up over Facebook’s proposed currency dictatorship

Andrew Saks

And all this from a company that had the audacity to deem all FX industry ads unfit for their network. Hypocrisy at its highest level

ECB

Last year, FinanceFeeds pointed out some very important caveats to bear in mind with regard to the proposed utterly hypocritical currency dictatorship that is being planned by the self-appointed adjudicator of every aspect of the internet, Facebook.

Today, some common sense has been displayed by the European Central Bank in its warning that the Libra cryptocurrency which Facebook has been developing may launch as early as January, with mainstream media citing three unidentified people involved in the project.

Yes, more unidentified people involved in a false and non-existent ‘currency’ with dubious aspirations. We have heard this before, and seen the disasters created by it.

With regard to this, a senior European Central Bank official has quite rightly stated “What is at stake is nothing short of the future of money”.

The news has alarmed central banks, which are currently at a minimum of two years out from creating their own digital alternatives.

ECB board member Fabio Panetta, speaking today at a Bundesbank-convened future of payments conference, argues that the impending revolution in payments “requires us to stand ready to reinvent sovereign money”.

The ECB is mustering support for the creation of a a digital euro, with multiple experiments underway across EU markets and around the world.

In Europe, the ECB and the national central banks have started preliminary experimentation through four work streams. At least that would be a digital version of the sovereign currency of the European Union, issued by the central bank itself and therefore no different or more risky than a standard paper Euro.

One of the most attractive key attributes of electronic trading for retail customers is the absolute self determination that it offers.

Ever since the pioneers such as Matchbook FX founder Josh Levy began to take steps in the mid 1990s to bring institutional trading and genuine market connectivity to the living room rather than the Wall Street trading room, the freeing up of market data and removal of barriers to the capital markets system has been a major R&D focus of our industry.

The combination of internet speed and freedom, cloud based hosting and even data distribution being provided by specialist infrastructure companies  dedicated to financial services, the world’s markets have never been more democratized and well organized.

Until the megalomaniac internet firms get involved. We have already seen how internet giants such as Amazon (AWS cloud is the defacto trade reporting medium due to its GDPR benchmarking) have attempted to gain a data monopoly.

Anyone who operates an electronic trading company or analytics firm that provides data and news to traders will already likely be an expert in how to navigate Google’s faceless requirements, the internet giant having a default monopoly on what is and what is not visible, and all firms having to adhere to their terms on indexing, advertising and information authenticity and duplication.

Google, in its all encompassing control of the global internet and services that rely on it, is effectively everybody’s boss and has total control over the way products are marketed, distributed and listed, and over how things are paid for online, and how displays are served.

What if one of these giants began meddling in the fake currency business?

Facebook is now going down that road.

Google, for all of its Orwellian attributes, is at least a well organized company that we can rely on for complete accuracy and is therefore a well respected reference point for internet governance, however Facebook is a social media site first, and an internet company second, and therein lies the problem.

Facebook views itself as a Google-level internet company and often bands together with Tier 1 internet firms like Google and Yahoo in order to monitor advertising and internet distribution. It also has similar methods of not allowing free speech, choosing who operates and what context things are operated in via its channels, which include messenger WhatsApp and its business-facing social media pages, which now often get removed without notice.

Imagine if that methodology was in charge of a widespread currency?

Facebook last year confirmed that it was planning to set up a digital payments system in about a dozen countries by the first quarter of 2020, which could certainly extend into offering services to online brokerages.

The social media giant began testing its own digital currency in mid-2019, which was initially referred to internally as GlobalCoin, with the tests concluded by the end of last year. Facebook at that time was expected to outline plans in more detail during the summer of 2020, and had already spoken to Bank of England governor Mark Carney.

Founder Mark Zuckerberg met Mr Carney in the spring of 2019 to discuss the opportunities and risks involved in launching a digital currency, which in itself is of note because most digital currency dreamers who do not come from our industry nor belong in it would never get near the Bank of England or any central currency issuer, largely because the authorities quite rightly are intent on dismantling the crypto scene completely. This therefore demonstrates the absolute power of Facebook.

Facebook also sought advice on operational and regulatory issues from officials at the US Treasury. The firm is also in talks with money transfer firms including Western Union as it looks for cheaper and faster ways for people without a bank account to send and receive money.

Facebook which owns WhatsApp and Instagram, has stated that it is hoping to disrupt existing networks by breaking down financial barriers, competing with banks and reducing consumer costs.

Not by offering a totally unstable crypto currency which would put any investor at the mercy of a company which has no reporting responsibilities to official financial institutions and wilfully removes business websites from its pages for reasons which cannot be questioned.

This is a step that all brokerages and tech providers should avoid. We, as an industry, should be proud of our own achievements in producing some of the world’s most transparent, well connected, fast and accurate execution systems, information and data entities and trade processing for multi asset solutions. That should be viewed as way ahead.

And all this from a company that had the audacity to deem all FX industry ads unfit for their network….

The ECB has every right to show this concern, and are, ironically, the potential savior in this quest by an entity that has no business attempting to operate its own version of a central bank.

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