- The US Fed economists recently released a paper that looked into original plans for Facebook’s Libra.
- When the coin was announced, financial authorities around the world bashed in fear of an economic crash.
- The new paper suggests that such danger never existed, and questions if policymakers were too harsh.
Back in early 2019, when Facebook first confirmed the rumors of the company developing its own stablecoin, Libra, the hype about the project soared. The project caused a lot of fear among traditional financial institutions, economists, and alike.
The crypto community itself was not impressed, as it never considered it ‘real crypto,’ due to its centralization. Everyone else, however, saw Libra as a potential destroyer of traditional finance due to Facebook’s massive reach.
The fears were so great that they even caused China to step up the development of its CBDC, which, in turn, caused central banks around the world to start developing their own native coin.
However, since then, the Libra Association has changed what its token is going to be. Now, the US Federal Reserve economists commented on the project’s original form, stating that it likely wouldn’t have been as damaging as everyone was led to believe.
The Fed’s new report, published by Jean Flemming and Garth Baughman, states that policymakers may have overstated Libra’s downsides. The two economists created a hypothetical scenario in order to evaluate the coin’s potential impact on the economy. They