The disruptors of Silicon Valley have always disliked regulation. It’s partly a philosophical thing; the libertarian mindset that feels suspicious of (perhaps superior to) big government.
But more importantly, Google, Facebook, Amazon and the rest have shied from most regulated industries because they worry it’s too difficult to make money there.
Their fears are well-founded. The technology may not be far away from developing safe driverless cars, but legislation won’t be ready for years. Britain can’t make its mind up about allowing electric scooters on the roads, let alone fix on rules for shared scooter schemes like Lime.
Yet along comes Facebook with an effort to crack one of the most over-regulated industries in the world — finance. Not just with a few simple products — insurance, perhaps — but its own private global currency.
While the ambition is laudable, implementation will be nightmarish. For starters, to underpin Libra’s value, it will presumably have to put billions of dollars, pounds and whatever other currencies it uses on deposit in banks somewhere — effectively creating the Central Bank of Facebook. How will that work? Who will monitor it?
Every government and finance regulator in the world will be crawling all over its potential to wreak havoc if it goes wrong. Let alone how it could be corrupted by criminals and moneylaunderers. And given how Facebook has misbehaved on everything from the US elections to terrorist propaganda, politicians may not be well-disposed to help.
Tech types say Facebook only wants to catch up with China’s super-digital approach to banking. But there’s a difference: in a dictatorship, it’s easier to get stuff done.
