Criticism Surrounds Facebook's Proposed Jump Into Cryptocurrency
MICHEL MARTIN, HOST:
We're going to turn now to an announcement this week that you might have missed, given all the other international news. Facebook announced plans to create its own global currency. It's called Libra, and Facebook says it will create a, quote, "more accessible, more connected global financial system," unquote. But others - lawmakers, tech and financial experts, including Facebook co-founder Chris Hughes - have raised serious concerns about control and privacy. And we should mention here that Facebook is among NPR's financial supporters.
To tell us more, we called on Lana Swartz. She is a professor at the University of Virginia, and she studies the intersection of money and technology. And we began our conversation by talking about what exactly Libra is.
LANA SWARTZ: So Libra is a currency that is slated to be issued by Facebook, potentially beginning as early as 2020. And it's a digital currency, which means it will live on the Facebook platform. And it won't be issued by any government. Rather, it will be issued by Facebook and its 28 partners and pegged to a basket of other currencies. And it isn't technically a peer-to-peer currency the way most cryptocurrencies are. Its value does not come from this kind of, like, libertarian market dream. Rather, its value comes from this organization's ability to manage it.
MARTIN: So what's good about it? Let's just start there. What's good about it from the standpoint of the public? Why would people be attracted to using this?
SWARTZ: You know, we expect to be able to communicate at the scope and scale of the Internet. Our lives and our financial lives have become more global, more instantaneous. And it is just true that our financial systems haven't kept pace with this. It is pretty hard still to do cross-border payments. And in lots of places, the financial infrastructure isn't that stable. So there is a need for something to make payments and access to money and access to financial services dependable, fast and to really keep pace with the way technology has evolved.
MARTIN: So that's the benefit of it for people who are - particularly people who are disconnected from the global capital markets. What's the downside that so many people are talking about?
SWARTZ: Well, just because there's a need for improved access and improved technology doesn't mean that a company like Facebook should be at the center of it. Facebook has shown itself to not be the best steward of our privacy, to not be the best at moderating and taking responsibility for the things that happen on its platform. It is also very difficult to hold them accountable. What mechanisms do we have for holding Facebook accountable currently?
MARTIN: Congresswoman Maxine Waters, a Democrat who chairs the House Financial Services Committee, urged Facebook to slow down, basically stop developing this product until regulators can examine it more closely. And Republicans have also expressed those concerns. So, given the kind of response that people are getting to this, how is Facebook responding to this? I mean, are they addressing the concerns and questions that people have about it? What do you see?
SWARTZ: I don't see that they've had a particularly good track record of addressing the concerns of regulators or of elected officials in the past. And I don't anticipate that they'll be particularly responsive in the future, especially since the initial target market of Libra is not United States citizens. It's people living and working in the global south who are not U.S. citizens and therefore are not beholden to U.S. regulations
MARTIN: That is Lana Swartz. She's professor of media studies at the University of Virginia. She's co-editor of the book "Paid: Tales Of Dongles, Checks And Other Money Stuff." Thank you so much for joining us.
SWARTZ: Thank you. Transcript provided by NPR, Copyright NPR.