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The other side of the Coin: Risks of the Libra Blockchain

Author

Listed:
  • Louis Abraham

    (Ecole polytechnique)

  • Dominique Guégan

    (University of Paris 1 Panthéon-Sorbonne; Ca' Foscari University of Venice)

Abstract

Libra was presented as a cryptocurrency on June 18, 2019 by Facebook. On the same day, Facebook announced plans for Calibra, a subsidiary in charge of the development of an electronic wallet and financial services. In view of the primary risk of sovereignty posed by the creation of Libra, the Central Banks quickly took very clear positions against the project and adressed a lot of questions to the responsible of the project focusing on regulation aspects and national sovereignty. The purpose of this paper is to provide a holistic analysis of the project to encompass several aspects of its implementation and the issues it raises. We address a set of questions that are part of the cryptocurrency environment and blockchain technology that supports the Libra project. We identify the main risks considering at the same time: political risks, financial risks, economical risks, technological risks and ethics focusing on the governance of the project based on two levels: one for the Association and the other for the Libra Blockchain. We emphazise the difficulty to regulate such a project as soon as it will depend on several countries whose legislations are very different. The future of this kind of project is discussed through the emergence of the Central Bank Digital Currencies.

Suggested Citation

  • Louis Abraham & Dominique Guégan, 2019. "The other side of the Coin: Risks of the Libra Blockchain," Working Papers 2019: 30, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2019:30
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    References listed on IDEAS

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    Cited by:

    1. Julien Chevallier & Dominique Guégan & Stéphane Goutte, 2021. "Is It Possible to Forecast the Price of Bitcoin?," Forecasting, MDPI, vol. 3(2), pages 1-44, May.
    2. Anastasia Melachrinos & Christian Pfister, 2020. "Stablecoins: A Brave New World?," Working papers 757, Banque de France.
    3. Helder Miguel Correia Virtuoso Sebastião & Paulo José Osório Rupino Da Cunha & Pedro Manuel Cortesão Godinho, 2021. "Cryptocurrencies and blockchain. Overview and future perspectives," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 21(3), pages 305-342.
    4. Julien Chevallier & Dominique Guégan & Stéphane Goutte, 2021. "Is It Possible to Forecast the Price of Bitcoin?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-04250269, HAL.

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    More about this item

    Keywords

    Blockchain Protocol; Central Bank Digital Currency; Cryptocurrency; Governance; Libra; Regulation; Risk;
    All these keywords.

    JEL classification:

    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K2 - Law and Economics - - Regulation and Business Law

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