{"id":1437,"date":"2019-07-08T15:15:32","date_gmt":"2019-07-08T15:15:32","guid":{"rendered":"https:\/\/blockchain-society.science\/?p=1437"},"modified":"2019-07-08T15:15:32","modified_gmt":"2019-07-08T15:15:32","slug":"banks-steer-clear-of-facebooks-libra-project-financial-times","status":"publish","type":"post","link":"https:\/\/blockchain-society.science\/?p=1437","title":{"rendered":"Banks steer clear of Facebook’s Libra project | Financial Times"},"content":{"rendered":"

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Banks steer clear of Facebook’s Libra project Traditional lenders are working on their own faster, cheaper payments projects Facebook\u2019s Libra threatens to break down banks\u2019 role as gatekeepers of the global financial system \u00a9 FT montage Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save Save to myFT Laura Noonan and Robert Armstrong in New York, Nicholas Megaw and Stephen Morris in London 12 HOURS AGO Print this page41 US and European banks are steering clear of Libra, Facebook\u2019s project for a new cryptocurrency, for fear of antagonising regulators and cannibalising their own digital currency projects In the two weeks since Facebook announced its plans for a new digital currency, there has been silence from the banks about a project that threatens to break down their role as gatekeepers of the global financial system.\u00a0 \u201cWe\u2019re still learning what it is and trying to work out where we stand on it; are we an opponent, partner or do we ignore?,\u201d said a person familiar with the approach to the project of one of the world\u2019s biggest banks.\u00a0 Up and down Wall Street, the City of London and Europe\u2019s financial centres, senior industry executives reel off a litany of hurdles to participation, while some also criticise the way Facebook has approached the project so far.\u00a0 No banks were on the initial list of 27 other partners for the Libra Association, which will oversee the currency, though David Marcus, who is leading the project at Facebook, said he wanted to \u201cabsolutely and strongly deny the fact that we\u2019ve approached banks and banks have said no\u201d.\u00a0 \u201cWe have had conversations with banks. We still have conversations with banks. And my expectation is that by the time this thing launches next year you will have banks that are going to be members of this,\u201d he told the Information.\u00a0 Senior executives at banks, however, tell a different story. At least one bank, the Netherland\u2019s ING, responded to Facebook\u2019s initial contact with a polite \u201cno thank you\u201d. Several other senior executives said there would be big hurdles for their future involvement, either as active members of the Libra Association or by helping people to convert traditional money in and out of Libra coins. Mike Corbat, head of Citigroup, recently said that even though he was a \u201ctrue believer\u201d in cryptocurrencies and their underlying blockchain technology, Citi\u2019s capacity to participate is constrained,\u00a0 \u201cThe challenge with cryptocurrencies is the opaqueness as to the sources of the money,\u201d he said, referencing anti-money-laundering standards banks are held to. \u201cIt would be outside our ability to take or send those monies on behalf [of people who hold them].\u201d Facebook’s Libra coin: the truth behind the hype Meanwhile, several banks are pushing ahead with projects to speed up payments, which some said would overtake the Libra initiative. Mastercard, which is part of the Libra project, is working with six Nordic banks to build a payments system that would allow real-time transfers, and be used across multiple currencies in multiple countries. Paul Stoddart, Mastercard\u2019s president of new payment platforms, said he expected to see \u201cmore initiatives like this around the world where there are groups of countries or regions that are economically more tightly integrated\u201d. In the US, The Clearing House, a payments company backed by a coalition of 25 large banks including JPMorgan Chase, Bank of America and Citigroup, offers domestic real-time payments on a network, launched in 2017, that already connects half of the country\u2019s deposit accounts.\u00a0 And on June, 13 of the world\u2019s biggest banks including UBS, Lloyds Banking Group and MUFG, announced plans to launch their own digital coin for use in wholesale banking.\u00a0 Recommended Libra: Facebook\u2019s digital currency Will Facebook\u2019s Libra currency shake up financial services? A senior executive at one of the banks involved said: \u201cFacebook is right that cross-border payments are clunky and convoluted and you have to go through far too many counterparties, but banks are getting involved and will solve this problem and solve it pretty quickly.\u201d The banks expect that the first institutional transaction with the \u201cuniversal settlement coin\u201d will take place within a year, and could be a cross-border trade.\u00a0 Meanwhile, the head of innovation at another US bank said the industry needed to understand a lot more, including the purpose of the Libra coin, the regulatory environment and the system\u2019s technical underpinning before they could commit to the project.\u00a0 \u201cWe will be talking to them [Libra] very soon,\u201d he said. \u201cThere\u2019s a huge amount of scepticism but there\u2019s some enormous names who have put up $10m a pop; there\u2019s enough names of enough reputable organisations that have put up $10m to be a part of it to say there\u2019s something there.\u201d\u00a0 A senior executive at a third large US bank said he did not believe banks would have to lobby very hard to ensure that Libra attracts the same know-your-customer and anti-money-laundering scrutiny as traditional payments networks, which will heap costs on the project.\u00a0 \u201cIf this thing has the scale of 2bn people who can move money around outside of the financial system (without AML\/KYC), it makes a mockery of the system,\u201d he said. \u201cWe won\u2019t have to persuade them in Washington\u2009.\u2009.\u2009.\u2009regulators are at it, they\u2019ll make them lift to the same standards as everyone else.\u201d\u00a0 The executive added that Facebook, which recently hired a prominent lobbyist from Standard Chartered, had already mishandled the regulatory piece by announcing their plans without having first brought regulators onside.\u00a0 Who is backing Libra so far?\u00a0 Payments Mastercard, PayPal, PayU, Stripe, Visa Tech and consumer\u00a0 Booking Holdings, eBay, Facebook, Farfetch, Lyft, Mercado Pago, Spotify, Uber Telecoms\u00a0 Iliad, Vodafone Blockchain\u00a0 Anchorage, Bison Trails, Coinbase, Xapo Holdings Venture Capital\u00a0 Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures NGOs\u00a0\u00a0 Creative Destruction Lab, Kiva, Mercy Corps, Women\u2019s World Banking When JPMorgan Chase drew up plans for a much more limited digital coin, they had extensive conversations with regulators before going public, asking them for informal guidance on what would be acceptable to them, a person close to that process said.\u00a0 The Trump administration\u2019s financial regulation regime is much more amenable to those iterative conversations than the Obama administration, which \u201csaw banks as the enemy\u201d, he added.\u00a0 The head of innovation of a large European bank said its participation was hampered by the fact that \u201cregulations don\u2019t allow us to be very entrepreneurial in this area\u201d.\u00a0 Mr Marcus acknowledged the regulatory concerns in a blog post on Wednesday. He promised a \u201ccollaborative process\u201d with regulators, and said replacing cash with a digital network \u201cwith regulated on and off ramps with proper know-your-customer practices\u201d could help limit financial crime.\u00a0 A senior executive at a fourth large US bank said his company might still participate but there was a long road ahead. \u201cThe money [initial $10m investment] over here wouldn\u2019t be the most material hurdles, they [the sums] are not big among in the scheme of things,\u201d he said. The test would be whether it is \u201cregulated, and is it really solving a problem or just ticking a quasi-innovation box, we\u2019d need to be comfortable with the use cases, what they would do beyond regulation, regulation is like a minimum bar\u201d. For some banks, even ticking all those boxes will not go far enough. \u201cYou could argue it\u2019s a competitor to our competitive advantage\u2009.\u2009.\u2009.\u2009the ability to move money around the world for customers within our network. So it would be rather unusual to go outside that, to compete against yourself, in many ways.\u201d<\/p>\n

Source: Banks steer clear of Facebook’s Libra project | Financial Times<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Banks steer clear of Facebook’s Libra project Traditional lenders are working on their own faster, cheaper payments projects Facebook\u2019s Libra threatens to break down banks\u2019 role as gatekeepers of the global financial system \u00a9 FT montage Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[22,58,44,5],"tags":[],"_links":{"self":[{"href":"https:\/\/blockchain-society.science\/index.php?rest_route=\/wp\/v2\/posts\/1437"}],"collection":[{"href":"https:\/\/blockchain-society.science\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blockchain-society.science\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blockchain-society.science\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blockchain-society.science\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1437"}],"version-history":[{"count":1,"href":"https:\/\/blockchain-society.science\/index.php?rest_route=\/wp\/v2\/posts\/1437\/revisions"}],"predecessor-version":[{"id":1438,"href":"https:\/\/blockchain-society.science\/index.php?rest_route=\/wp\/v2\/posts\/1437\/revisions\/1438"}],"wp:attachment":[{"href":"https:\/\/blockchain-society.science\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blockchain-society.science\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blockchain-society.science\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}