Are central bankers starting to come around to bitcoin? Christine Lagarde, currently chair of the International Monetary Fund and nominee for the presidency of the European Central Bank is an advocate, and now the former governor of Brazil’s monetary authority has called the cryptocurrency “spectacular”.
In an article in Brazilian media outlet Estadão, Gustavo Franco heaps praise upon decentralized digital currencies, as well as potential non-bank currency offerings such as Facebook’s Libra project.
Franco was the governor of the Brazilian Central Bank twice in the 1990s and a chief architect of the Real Plan reforms that ended a run of severe hyperinflation. He now runs his own private investment company called Rio Bravo Investimentos.
He writes in the Estadão article that bitcoin’s large market cap puts it in the same league as many of the world’s larger companies. He says:
Bitcoin is the most spectacular case of cryptocurrency because if it were a business it would be worth $175 billion (value of all outstanding bitcoins). Only it has no shares, no shareholders or governance.
He notes also that taken together, the market cap of all the other cryptocurrencies is just under $100 billion, with 14 of those worth over $1 billion each.
Franco discussed other forms of new money and methods of payment in his article and, inevitably the subject of Facebook’s Libra project surfaced.
While praising the project’s innovation and potential scale, he added a note of caution over whether such a project would involve the same internal controls like those that apply to banks. He also suggested the Libra model, if successful, could apply to other global corporate giants.
In theory, any global company, even other than ‘big tech’ could do something similar: McDonald’s could create the Mac, a cryptocurrency convertible into Big Macs; Starbucks, the Star, working as a cappuccino voucher, all in blockchain.
Franco, however, is one of few people to have been through the global central bank system to find anything worthy in the crypto-universe.
The Libra project has inspired a new level of ire from central bankers, regulators and government officials since its potential launch was announced last month.
Their major fear is that Facebook can leverage its billions of global users to participate in a cryptocurrency payments project that could rival and affect the stability of sovereign currencies.