A Singaporean top central banker pointed out on Wednesday that Facebook's planned Libra cryptocurrency is raising questions about the potential flaws of traditional central banking operations.
According to Bloomberg, Managing Director of the Monetary Authority of Singapore (MAS), Ravi Menon, said Libra can be deemed as a challenge to global central banks and the way they offer services or process payments.
Menon said financial inclusion and cross-border payments are two of the issues that Libra seems to resolve. Facebook's attempt to provide consumers with a more affordable method of paying or making online transactions now opens talks about the operative systems of central banks that do not offer the said services.
"They are pointing to a correct problem, they are offering a solution," Menon argued, adding that regulators and bankers can actually discuss potential issues and resolutions with Facebook.
For Menon, the Calibra Project may be integrated with existing banking systems to hopefully patch up what traditional banks lack. However, it remains to be seen how the U.S. government and global regulators will react to Menon's suggestion.
Menon's comments came amid ongoing debates about the impact of the Libra cryptocurrency to consumers. Regulators have been arguing that the digital currency may pose security risks to customers.
The Calibra Project already faced multiple headwinds over the past few weeks, including the exit of some major partners, including eBay, Visa, and Mastercard. The said partners were formerly part of the Libra Association - the group that will oversee transactions and operations.
Facebook repeatedly explained that the purpose of the Libra cryptocurrency is to benefit unbanked consumers who also want to make online transactions. The latest data revealed that around 1.7 billion people around the world are unbanked.
For Menon, traditional banks and financial institutions can actually do more to help these unbanked consumers who have no means of making purchases or pay online.
Meanwhile, Facebook founder and CEO, Mark Zuckerberg, stood before the U.S. Congress on Wednesday to explain Libra's side of the story. His appearance came after continued criticism from financial experts and security regulators.
According to The Verge, Zuckerberg explained at the Capitol Hill that the company is expecting Libra to bring in cash by increasing digital ad prices. He added that the project is focused on creating "value in people's lives."
It is worth noting that Zuckerberg did not mention anything about transaction fees, but he said before the Calibra Project can achieve its targets of helping bring new solutions for consumers, the cryptocurrency needs the support of regulators.
