Group behind Facebook’s Libra coin announces 21 founding members

Facebook executives have claimed the new digital coin could help lower costs for global money transfers and help those without access to the banking system. (Reuters)
Updated 15 October 2019

Group behind Facebook’s Libra coin announces 21 founding members

  • Planned Libra global currency faces swelling criticism from regulators
  • Group of Seven warned it poses a threat to the global financial system

GENEVA: The Libra Association, created by Facebook to launch its new cryptocurrency, has announced its 21 founding members after defections by previous supporters including Visa and Mastercard.
The announcement on Monday came as the planned Libra global currency faces swelling criticism from regulators, and reported warnings from the Group of Seven that it poses a threat to the global financial system.
The group kicked off its first council meeting in Geneva and founding members including Uber, Spotify and Vodafone formally signed onto the Libra Charter, director general Bertrand Perez said.
“We now have a total guarantee of their involvement, so we have confidence in the project,” he said.
Last month, the non-profit association voiced hope that the number of companies backing it when it opened for business would swell from an initial 28 to “well over 100.”
But instead the list has shrunk, after more of its initial backers walked away amid swelling criticism from regulators around the world.
Credit card giants Visa and Mastercard, online marketplace eBay and digital payments firm Stripe each announced Friday they had changed their minds about being founding members of the association, following a similar recent announcement by digital payments firm PayPal.
The Libra Association confirmed Friday that the companies would no longer be founding members, but said it would continue building an alliance of businesses, social-good organizations, and others to implement the cryptocurrency.
Its launch was originally planned for mid-2020, but Perez said he had not ruled out a later start date.
“What we want is to build a platform that is solid, that is there to last and that will survive in the long term,” he said, adding he was still “optimistic” about reaching around 100 members as planned.
The membership departures came after US senators sent letters to several financial firms noting that they could face “a high level of scrutiny from regulators” if they participated in the new currency plan.
French economy and finance minister Bruno Le Maire had warned that under current circumstances, Libra posed a threat to the “monetary sovereignty” of governments and could not be authorized in Europe.
Facebook executives have, however, claimed the new digital coin could help lower costs for global money transfers and help those without access to the banking system.
Facebook chief Mark Zuckerberg is set to testify at an October 23 hearing in the US House of Representatives on the Libra plan.
But in a fresh blow, a draft G7 report has outlined nine major risks posed by such digital currencies, according to the BBC.
The report, due to be presented to finance ministers at International Monetary Fund’s annual meeting this week, did not single out Libra but referred to “global stablecoins” with the potential to “scale rapidly” as posing a range of potential problems.
Stablecoins are seen as more steady than cryptocurrencies like Bitcoin, since they are pegged to traditional currencies such as the US dollar or the euro.
But the G7 draft report reportedly cautioned that such currencies could pose problems for policymakers setting interest rates, and could threaten financial stability if users suddenly suffer “loss of confidence” in the digital unit.
Randal Quarles, the head of the Financial Stability Board (FSB), which oversees regulation among G20 economies, also sent a letter to G20 finance ministers Sunday warning that “global stablecoins could pose a host of challenges to the regulatory community.”
This, he wrote, was “not least because they have the potential to become systemically important, including through the substitution of domestic currencies.”
“Stablecoin projects of potentially global reach and magnitude must meet the highest regulatory standards and be subject to prudential supervision and oversight,” he insisted.


Oil world tries to read Chinese post-pandemic demand

Updated 25 October 2020

Oil world tries to read Chinese post-pandemic demand

  • The economic outlook for Asia will help decide some pretty pressing short-term policy issues
  • China’s refineries are getting back in top gear, and are looking to increase crude purchases in anticipation of economic recovery

DUBAI: While all eyes are on the US presidential election, the energy sector is keeping a watchful scrutiny on what is happening on the other side of the world, in China and the rest of Asia. Who the Americans choose will of course have enormous influence on energy policy for years to come, not least because Donald Trump versus Joe Biden is, in many ways, a runoff between the traditional oil and gas industry and the alternative renewable future.

But policymakers in the Middle East and in the broader OPEC+ alliance led by Saudi Arabia and Russia are looking eastward to determine more immediate priorities. The economic outlook for Asia, and of China in particular, will help decide some pretty pressing short-term policy issues.

At what official selling price should big producers such as Saudi Aramco and Adnoc mark their exports to China in the coming weeks? What stance should OPEC+ take toward compliance and compensation for the rest of this year? And, crucially, should it press ahead with plans to put an extra 2 million barrels per day (bpd) of oil on global markets in January, as the historic April cuts deal envisaged?

An added variable has been thrown into the works with higher-than-expected output from Libya, which has resumed production and exports from its war-torn facilities and could, according to some energy experts, be producing another 1 million barrels by the end of the year.

That is hardly a deluge of crude by global standards, in a world that consumes above 90 million bpd, though it is enough to complicate the already-delicate calculations of OPEC+ analysts.

But the big imponderable is China. The country blew hot and cold on oil imports since the April crisis, snapping up cheap oil one month and easing back on imports the next. It was hard to read the signals coming out of China.

Were the pauses in imports due to a slower rate of recovery from the pandemic economic lockdowns? Or was China simply chock-full of crude, to the extent that it had filled its strategic reserve and had nowhere else to store it?

Evidence of the latter came in the form of the flotilla of crude tankers waiting to unload off the coast of the Shandong oil terminal. At one stage, there were as many as 60 million barrels afloat awaiting discharge off China’s coast.

The people who make a living from tracking these things say that there has recently been evidence of a slow unloading from these ships, but that there is still an awful lot of crude afloat, waiting to come onshore.

There have also been signs that China’s refineries are getting back in top gear, and are looking to increase crude purchases in anticipation of economic recovery. One of the biggest, Rongsheng Petrochemical, recently snapped up 7 million barrels through Singapore, in a move taken by some to be the starting gun on an aggressive Chinese buying spree.

The economic logic suggests that if that is going to happen, it will take place pretty soon. According to the International Monetary Fund’s latest review, China — the only major economy forecast to grow in 2020, with 1.9 percent growth — will soar to 8.2 percent expansion next year. The country’s early and rigorous lockdown, and high levels of economic stimulus since then, are clearly paying off.

Whether the Chinese lift-off comes in time to affect OPEC+ calculations over the planned January increase remains to be seen. From where oil policymakers are looking at it at the moment, it looks like a good bet that China, at least, will need plenty of crude next year to fuel its post-pandemic recovery.