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Beyond the Big Challenges facing Facebook's Libra

Author

Listed:
  • Jamal Bouoiyour

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour, IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC PAU - Ecole Supérieure de Commerce, Pau Business School)

  • Refk Selmi

    (IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC PAU - Ecole Supérieure de Commerce, Pau Business School, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

Abstract

The Facebook's announcement that it would create its new currency « Libra » sparked a debate with respect the added value, security and regulatory aspects of virtual currencies. Beyond the challenges facing Libra (i.e., regulatory concerns and the risk of money laundering and fraud, etc.), this study seeks to assess if the announcement of this type of project has an impact on the cryptocurrency market. A dynamic event-study methodology is used to examine the abnormal returns of Bitcoin and other major altcoin markets (in particular, Ethereum, Litecoin and Ripple) as a reaction of Facebook « Libra » announcement. Our results suggest that all the cryptocurrencies respond positively to the official announcement of Facebook's much-anticipated cryptocurrency project, and appear highly reactive during the succeeding days. Despite crucial differences between « Libra » and cryptocurrecies, the entrance of Facebook into the cryptocurrency market can be regarded as a stamp of approval that helps to legitimize the crypto space making it go mainstream.

Suggested Citation

  • Jamal Bouoiyour & Refk Selmi, 2019. "Beyond the Big Challenges facing Facebook's Libra," Working Papers hal-02309316, HAL.
    • Handle: RePEc:hal:wpaper:hal-02309316
    Note: View the original document on HAL open archive server: https://hal.science/hal-02309316
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Keywords

    Facebook's new Libra; Cryptocurrency market; Event study methodology;
    All these keywords.

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