We asked the question last May: will the GAFAs precipitate the collapse of the banks? Now, with the cryptocurrency that Facebook will launch next year, we must move to a new level: in addition to competing with the traditional banking sector, Libra risks accelerating the loss of credibility of central banks. Because this time, it is not just about new payment services, but a new international currency in its own right.

Indeed, the Libra will be what is called a stablecoin, i.e. a stable cryptocurrency because it is based on a basket of several major international currencies (dollar, euro, pound sterling, undoubtedly yen and yuan). This stability is an essential difference with bitcoin, whose high price volatility discourages many users. Facebook will create a dedicated portfolio to manage its currency, Calibra; again, its ease of use will be a real advantage over the various existing bitcoin portfolios.

With nearly 3 billion members, Facebook (as well as its subsidiaries Whatsapp and Instagram) has a strike force that no company has ever before had in history. As a result, its cryptocurrency can compete with the world's sovereign currencies. Emerging countries with an inflationary currency and exchange controls can legitimately see Libra as a direct competitor. Their population will have an interest in switching to the new currency to free themselves from the inflation that is eating away at their savings. Central banks in emerging countries must be seriously concerned and it is to be expected that many of them will simply want to ban it.

For OECD countries, which enjoy stable currencies, interest will be less obvious at first glance. But the ease of use and the trend can convince many users. But above all, those who doubt the solidity of their banks (Italians, Greeks, Spaniards, Deutsche Bank customers, etc.) can also refer to the Libra to protect their assets (isn't it better to deposit cash on Facebook, which has more than $100 billion in cash and it’s worth $500 billion on the stock market, almost as much as the entire European banking sector, rather than in a bank with a balance sheet full of debt?).

The European central banks have sniffed out the danger and have just decided, at France's initiative, to create a "taskforce" on stablecoins within the framework of the G7. The concern is real, especially as their credibility is dangerously eroding these days: the Fed has just interrupted its rate hike, the ECB admits that it could continue its zero-rate policy, and the BoJ remains stuck in a massive EQ. Economic players are beginning (at last!) to question the credibility of central banks (and moreover the price of gold is starting to rise...).

This type of competition has already occurred in history: in the Middle Ages, the Florentine Florin and the Ducat of Venice circulated throughout Europe. Their guaranteed gold content made them trusted currencies in relation to national currencies that were too often manipulated. However, Libra does not play into this category and it is its weak point, which has not yet been sufficiently measured: the asset that will support it will be "the debt from stable governments with low default probability that are unlikely to experience high inflation" as stated in its White Paper. Precisely, in the event of a "2008 but worse" crisis, there may not be any... If the yen, the euro, the dollar collapse and experience a wave of inflation, the Libra will be swept away in the same turmoil, and savers will suffer severe losses. No, the only real guarantee in the event of a currency crisis is physical gold, as in the days of the Florin and the Ducat.

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