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  • Joseph E. Stiglitz expresses a critical view of Facebook’s cryptocurrency.
  • He thinks it will become a money laundering tool.

Joseph E. Stiglitz, a Nobel laureate in economics and a prominent Keynesian, believes that Facebook’s digital currency can hardly deserve to be trusted.  

“Only a fool would trust Facebook with his or her financial wellbeing. But maybe that’s the point: with so much personal data on some 2.4 billion monthly active users, who knows better than Facebook just how many suckers are born every minute?” he wrote in the recent post on Project Syndicate.

A prominent critic of the free market and globalization believes that the traditional banking sector has become too transparent to be used for money laundering purposes and other illegal activities. While Libra may become a new handy tool for crime figures of all sorts as it will allow bypassing the existing anti-money laundering rules.  

Many national currencies have been exceptionally stable for many years, despite lots of critical voices who claim fiat money unstable, he writes.

However, the economist admits the existing financial system is not efficient due to the lack of competition, especially in the US banking sector.

“The real problem with our existing currencies and financial arrangements, which serve as a means of payment as well as a store of value, is the lack of competition among and regulation of the companies that control transactions. As a result, consumers – especially in the United States – pay a multiple of what payments should cost, lining the pockets of Visa, Mastercard, American Express, and banks with tens of billions of dollars of “rents” – excessive profits – every year,” he explains.
 
Though he thinks that these problems should be solved by the states, while instruments like Libra will only make things worse by fostering illegal activities and money laundering.