“You can’t put the genie back into the bottle,” said Katharina Pistor at our exclusive event in DC during the Libra hearings. Pistor, the Edwin B. Parker Professor of Comparative Law at Columbia Law School, explored the legality – and importance – of corporate tokens like Libra in a world that seems reticent to adopt them.
“Facebook’s Libra is designed to become a new global currency that will complement existing fiat currencies. It is designed as a for-profit currency of currencies,” Pistor said at the House Financial Services Committee on July 17.
Pistor went on to describe the governance model of Facebook’s Geneva-based cryptocurrency project as a “concentration of power… unmatched by any meaningful accountability to anyone.” Though that’s less frightening than it sounds.
Later, at an Q&A hosted by CoinDesk, Pistor explained that Libra could only be possible because of the regulatory infrastructure that already supports fiat currencies. Just as treasury bills and bank deposits are guarded by the reputation and “full faith of the United States behind” them, so too would Facebook’s stable cryptocurrency be ingratiated in the financial ecosystem. “[Facebook] can’t do this without the United States.”
Libra, because of its streamlined and “elegant” design, “could eliminate a lot of things. It could be a lot cheaper. It could just be a much better system for many customers.” Ultimately, Pistor’s question becomes, “whether the central banks could actually offer something that’s more attractive.”
“I think the really important question is what is the benefit of doing it through a private agent rather than a public agent,” she said.