Libra — Concept and Policy Implications

Abstract

The Libra Association’s announcement about the issue of a private global currency has triggered a heated debate about the concomitant advantages and risks. Proponents expect Libra to detach money from its’ governmental chains’ and liberalise and cheapen monetary transactions around the globe. Opponents argue that a private currency imposes unforeseeable risks for both individuals and the whole financial system. Furthermore, Libra could hamper monetary policies of national central banks. This paper contributes in two dimensions. First, it provides a comprehensive view of Libra’s concept and market potential, its benefits and possible downsides. Second, it examines potential implications that a private currency poses for monetary policy and banking regulation.