314 Interactions, 4 today
The thought of a private company issuing currency did not sit well with many financial authorities when Facebook worked on its digital currency project Diem, formerly known as Libra. The majority of them believed that private stablecoins could pose a challenge to financial markets and fiat currency.
At a recent conference held by the Bank for International Settlements, Microsoft President Brad Smith sided with regulators on this issue. Governments, he claims, are the only authority authorised to grant digital money and they are the only ones that are “responsible to the people and still have the public interest” in mind, when it comes to “money supply.” He further said:
“I’m not a big fan myself of encouraging or asking or wanting us to participate in the issuing of currency. I think the world has been better served by what has been a movement over centuries to put that in the hands of governments.”
Despite regulators’ scepticism about Diem and the concept of privately distributed stablecoins, the project is trying new ways to deliver the cryptocurrency. Diem’s development team is planning to create a stablecoin this year. Their ambition is to “require a simple global currency and financial system that empowers billions of people.” It also aims to receive a warrant from the Swiss Financial Market Supervisory Authority, known as Finma. According to Christian Catalini, Diem’s co-creator, the project could aid in the transition to CBDCs and could work closely with global custodian banks.
However, the Microsoft President has made the company’s opposition to projects such as Facebook’s Diem rather clear. He further said:
“We’re not a bank and we don’t want to become a bank and we don’t want to compete with our customers who are banks.”
Interestingly, Smith is not the only Microsoft executive who favours regulators over new tech firms. Previously, Bill Gates, the company’s creator, said that he is “not short Bitcoin” and has taken a neutral stance on the crypto asset. Following this remark, Gates acknowledged that he was “not optimistic” on Bitcoin at the moment, and that his bearish stance was attributable to the cryptocurrency’s large energy usage.