South Korean Regulator Says Facebook’s Crypto Project Threatens Financial Systems

Asia Blockchain Review
July 24, 2019

South Korea’s financial regulator has warned that Facebook’s recently unveiled Libra cryptocurrency poses a potential threat to the stability of financial systems. 

As reported by CoinDesk, the Financial Services Commission (FSC) examined the potential consequences of a scenario in which 2.4 billion Facebook users worldwide transferred just a small portion of their bank deposits to Libra.

Simplifying Exchanges via Crypto Limits Central Bank Control

According to the FSC, a transfer of just 10% would cause the solvency of banks to diminish along with their loan reserves. This would in turn represent a threat to emerging markets due to the relocation of capital out of those economies.

The agency further raised concerns that bank runs could occur as people move their national fiat currency to Libra during financial or foreign exchange crises. 

The simplification of money exchange and remittances through the social media crypto is also expected to limit the ability of central banks to control international capital movements. Additionally, monetary policy would see limited effectiveness in the event that Libra becomes widely exchanged for central bank currency.

Libra Deemed Major Threat to the Traditional Banking Industry  

In the absence of proper bank-like controls, the FSC expressed further concerns that Libra could be widely used for money laundering. 

The FSC has also deemed the Libra project to be a major threat to the traditional banking industry, as South Korean bank revenues from remittances would be substantially reduced if the project were to allow virtually free overseas payments.

 The agency nevertheless stressed that its report was intended to “facilitate understanding” on overseas trends, and did not signify an official opinion on the Libra project.


About Asia Blockchain Review

Asia Blockchain Review is the largest initiative for media and community building in Asia for blockchain technology. It aims to connect all blockchain enthusiasts on a regional scale and facilitate the technological foundation of blockchain through a range of group discussions, technical workshops, conferences, and consulting programs.

Our goal is to cultivate and encourage a collaborative community for our members to gather, share their experiences and endeavors in the blockchain space, and brainstorm the potential uses of blockchain technology.

Follow Asia Blockchain Review on:

Related Article
South Korea’s KT Develops Blockchain Halal Certification
Major South Korean telecom firm KT has announced its partnership with the Korea Muslim Foundation an...

October 18, 2019

WS Asia Pacific Opens New Office in Cambodia 
A new business consultancy with a focus on bringing small and medium-sized enterprise (SME) investme...

October 18, 2019

UAE Land Registry Makes Use Of Blockchain
The UAE government and private sectors are using blockchain technology to record and manage land reg...

October 18, 2019

Walmart Initiates Blockchain Project for Indian-sourced Seafood
Walmart has announced it is introducing a blockchain traceability project which will ensure the supp...

October 17, 2019

We provide information about Asia Blockchain Review latest activities as well as global blockchain news and research. Subscribe to our Newsletter now or Contact us