University of Berkeley economics economist Barry Eichengreen believes the stablecoin Libra has too many insoluble problems and strong government opposition.
“Libra is an interesting idea, which however will never be realized,” Eichengreen expressed his opinion during the Unitize conference.
According to the economist, the stablecoin sector does not look back at history and the monetary economy. He said that he had repeatedly met with the founders of stablecoins. They knew blockchain very well, but knew nothing about the economics of currencies. They did not know about the dangers of speculative attacks on fixed-rate currencies, which in many cases happened in the past.
“In the case of a partial dollar supply, stablecoins are too fragile – they are subject to such speculative attacks and collapses. If they are fully or over-provisioned, then it’s very expensive to scale and grow, ”says Barry Eichengreen.
Although many analysts believe that Libra will be able to greatly influence the economic system, Eichengreen believes that this stablecoin has too many “unsolvable problems.” People believe that people in countries with volatile economies and volatile currencies will use Libra. However, according to the economist, Libra plans to over-support its coin, and it needs to be supported with high transaction fees. But Libra cannot go for it, therefore, “there are questions about an adequate amount of buffer capital.”
Professor Eichengreen noted that many governments simply will not tolerate the creation of Facebook’s private digital currency.
“There are many uncertainties that need to be addressed. And I came to the conclusion that some of these problems are insoluble, ”concluded an economist from Berkeley.
Earlier, Eichengreen said that the Libra White Paper has a poorly defined anti-crisis policy.