The ex-federal prosecutor claims that the United States blocking Libra will have national security consequences. It can be dangerous to lock out the technology before it takes root in the country and all over the globe. This is caused by misjudgments.
National security repercussions will happen if the US decides to lag in cryptocurrency development. This is because other countries, such as Russia and China, plan to launch Libra’s competitors. China has been researching its digital currency from 2014, which started gaining momentum in 2018. It means that China’s digital currency might operate sooner than Libra.
Exploring National Security
The ex-federal prosecutor Haun held a position at the justice department and performed in the National Security Division. She dealt with terrorism, criminal cases, and mafia before joining crypto. Haun started by inspecting the use of Bitcoin to accelerate cyber-crime and extortion when she spent her time in the justice department. But what is national security, and how does it relate to Libra?
A national security definition deals with the security of the state: institutions, economy, and citizens, which are the responsibility of the government. It was originally intended to protect the country against military attacks. Today, national security deals with non-military aspects, such as terrorism, economic, energy, and cyber-security.
Libra is the first cryptocurrency developed to allow people to gain access and engage in the Libra network. Users can easily exchange fiat money for digital currencies and utilize them in online transactions such as buying Hosting Services, Domain Names, VPN services or any other product or service.
Why the National Security Council Is Concerned
Money is what we use to measure our wealth, which is described as productive assets. Libra, a digital currency, continues to get backlash from politicians, economists, and the public. If it is unbeaten, Libra might change how we utilize funds today.
Money has always been an important aspect of central banks and the state. However, the blooming of decentralized currencies, such as cryptocurrency, is threatening this monopoly. This is the first time a company has decided to issue its currency.
Libra is distributed by Facebook, in conjunction with several large global organizations; for instance, Uber, Visa, and MasterCard. This coin can be purchased using any currency. The more secure currencies which support Libra are reserved in banks to prevent the Libra from fluctuating. It means that you can trade this coin back to get its exchange worth. Libra’s value is set to rise because many currencies are used to purchase it.
It will be easy for people to save their Libra on mobile phones and online wallets and utilize it from any locality. It can be transferred through Messenger and WhatsApp, as well as used it in stores. Although many folks don’t have bank accounts, they have phones with an internet connection. This is an excellent opportunity for Libra to grow, given that Facebook provides free internet.
The US Is Not Impressed
Although Libra has its advantages, many folks overlook other aspects. This coin strives to compete with the US dollar. The national security strategy is to block this gaining momentum because the US dollar is the globe’s reserve currency. Other nations stock up the US dollar because it is stable and not likely to fluctuate.
The US worries that the national security systems will be compromised if they accept Libra. This is because the funds used to purchase Libra are not only reserved in banks. The money is used to buy debt obligations, which are given by states.
If Libra becomes successful, many states will hold it in their reserves because it would provide stiff competition for the US dollar. Foreign nations are crucial to the United States of America because they have to keep purchasing US government debt; otherwise, the US deficit will increase.
The concerns for national security revolve around the fact that if the deficit increases, interest rates will go up. This makes it hard to get loans, and the budget deficit extends. If foreign states decide to reserve Libra rather than the US dollar, this could be bad news for the nation.
Why is the National Security Council concerned if Libra can use the money it received to buy the state’s debts? This is true, but Libra can use those funds in whatever projects they want. They could also use the funds to purchase the US treasuries without US dollars.
If Libra becomes fruitful, it will have higher bargaining power over many nations. It could bring a displacement in economics, putting Libra at an advantage and a position to dethrone the US dollar as the world’s reserve currency. Libra can easily buy US debt in the form of collateral in exchange for this position.
Making Libra the globe’s reserve currency could be beneficial for smaller nations because they would have a guarantee that they would be investing in a stable coin. Also, their funds would be used to purchase their debt. This means that there would be no pressure on their resources, and they can offer more funds with lower interest. However, one of the main reasons why the US wants to block Libra is because it could lead to the recession of the dollar.
The US government is also concerned that Libra might start issuing unjust conditions in specific nations disregarding their competition. For instance, Libra could purchase a country’s dues in exchange for certain licenses and resources. This instance is the only concern.
If Libra is governed, it will transform how we use funds today. It will have great implications for the US dollar. Also, this means that organizations in the Libra Association could become too strong to fall without even being legalized.
According to the ex-federal prosecutor, shutting down Libra could have negative consequences on national security. Even though lawmakers asked Facebook to stop the creation of Libra, they cannot prevent them from developing the coin. Nevertheless, they can pass strict laws if Facebook does not cooperate.
Lawmakers are concerned about making significant inquiries on the presence of congress. They are interested in finding out the risk of Libra to macroeconomics, politics, and financial stability. The US is worried about the dollar and the economic implications that will follow the legalization of Libra.
What other reasons do you think the US has for blocking Libra? Please share your comments with us.
About the Author
Thomas Glare is a freelance writer who is proud of providing relevant information to his readers. He is an expert in cyber-security and the economy. He spends his time in the library researching the global economy. Thomas also interacts with lawmakers who keep his updated on various laws concerning the economy.