The first, and perhaps the simplest, is that organizing a payments system is a complicated and difficult task, one that requires enormous investment in compliance systems. Banks pay attention to details, complying with regulations to prevent money-laundering, terrorist financing, tax avoidance and counterfeiting. Recreating such a complex system is not a project that an institution with the level of privacy and technical problems like Facebook should be leading. (Or worse, failing to recreate such safeguards could facilitate money-laundering, terrorist financing, tax avoidance and counterfeiting.)

Ahh, the classic sperfecta of private money boogymen: money-laundering, terrorist financing, tax avoidance and counterfeiting. Oh my!

All jokes aside, this is a fair point. Organizing a payment system is an extremely complicated and difficult task. However, so is building and maintaining the largest communication network on the face of the Earth with nearly 99% uptime.

Facebook is one of the biggest technology companies in the world. They take on extremely complicated and difficult tasks every day.

I’m not sure what the author is referring to when he saids Facebook has “technology problems”, but from my perspective they have the technology part down unlike banks like Wells Fargo whose systems have gone down for an entire day leaving customers without access to their money.

I agree that Facebook has an abysmal history of protecting its users privacy, but again, current banks and regulated agencies aren’t exactly angels either (cough Equifax, cough)

The second problem is that, since the Civil War, the United States has had a general prohibition on the intersection between banking and commerce.

Just because this has been avoided in the past doesn’t necessarily mean it should be avoided now. Not to get hyperbolic, but from the time of the Colonies until the Civil War, the United States allowed citizens to own slaves. Things change, values change, technology changes. We should always be questioning what has generally been accepted in the past.

The author later goes on to say

Americans historically didn’t want banks competing with their own customers

This should read American businesses historically didn’t want banks competing with their customers. That statement, when unwrapped, is just using banking to mask a general truth: busineses don’t like competition. And why? Because competition forces businesses to compete with one another for customers; to provide better goods and services at lower prices. So as far as I’m concerned, this point is moot and may well serve as a reason to allow Facebook to get into the business of money.

This brings up another general question: Why shouldn’t private companies be allowed to issue their own currency?

It is generally accepted that currencies serve three roles: a medium of exchange, a store of value, and a unit of account.

If stores want to issue their own currency and accept them at their stores (and other businesses or individuals also want to voluntarily accept them as payment), then what’s the big deal? I think most people would agree that we should allow people to accept whatever they want as payment for their goods and services. If I sell you my couch and you want to pay me in beer, and we both agree that that’s a fair trade and make it happen, then what’s the problem?

The third problem is that the Libra system — or really any private currency system — introduces systemic risk into our economy. The Libra currency is backed, presumably, by bonds and financial assets held in reserve at the Libra Reserve. But what happens if there is a theft or penetration of the system? What happens if all users want to sell their Libra currency at once, causing the Libra Reserve to hold a fire sale of assets? If the Libra system becomes intertwined in our global economy in the way Facebook hopes, we would need to consider a public bailout of a privately managed system.

Again, we should question what we did in the past. We have set a bad precedent in this country that when things go awry, we need the government to come in and bail people out. Whether that be in the banking sector or the automotive sector or any other sector of the economy.

The fact is that all businesses introduce systemic risks to the economy. The economy is an ever flowing, dynamic system of exchanging goods and services with one another. If we want to reduce the risk of one organization influencing the economy to such an incredible degree, we should be championing and allowing more competition.