Economist Joseph Stiglitz: Only a Fool Would Trust Facebook's Libra

Nobel prize-winning economist, Joseph Eugene Stiglitz, claims that "Every currency is based on trust, but only a fool would trust Facebook's Libra" in an article published on July 2.

He notes, libra could profit off of transaction data as Facebook does, which raises privacy concerns.

Stiglitz has no trust in Libra's management, since "Time and again, Facebook's leaders, faced with a choice between money and honoring their promises, have grabbed the money."

The Bank of Japan Official today stated that libra exploits the financial system, English-language local media Nikkei reported on July 3.

A Bank of Japan official noted that Facebook's libra would be "Piggybacking for free on a financial system that takes heavy costs" to maintain, and regulators fear its effect on financial stability.

The report further noted that when users buy libra, the funds go towards acquiring a combination of national currencies and short term government securities.

According to Nikkei, the choice of not tying libra to any particular fiat currency is meant to avoid any nation's local regulation.

Since users do not perceive interest on the assets underlying their libra holdings, this would decrease the efficacy of lowering or raising interest rates for monetary policy.

As Cointelegraph reported earlier today, over 30 advocacy groups have appeared as signatories on a request that Congress and regulators implement an official moratorium on Libra development.

Financial services firm Jefferies' recent survey found that American users will hardly use libra due to a lack of trust.