- Per David Marcus, 1.7 billion people across the globe lack access to financial services.
- Marcus claims that Facebook can help improve the financial system if regulators let it.
- Despite suffering a massive data breach, Marcus claims Facebook can run a payments network.
- The Facebook executive says the Novi Digital Wallet is ready to launch.
The Head of Facebook’s Financial Division, David Marcus, recently offered his opinions on the ongoing debate about stablecoins, cryptocurrencies, and other digital assets and how they can help improve the financial system. He shared his views by publishing a blog post. In the publication, Marcus said the current financial system is antiquated and not interconnected.
According to him, these traits make the financial system costly and slow. As a result, approximately 1.7 billion people across the globe are unbanked and an even larger number is underserved. Focusing back on the U.S. alone, Marcus said some 62 million people are either unbanked or underbanked. On top of this, the current state of cross-border payments is deplorable, with the average cost per transaction being 6.5%, rather than the proposed Sustainable Development Goal of 3%. Moreover, the time required for end-to-end execution transactions is three days.
The COVID-19 pandemic has fostered the expansion of the digital economy across the globe as it changed how people buy goods and services, and how they interact with businesses in general. On top of this, those in developing economies became increasingly dependent on money from family members working in foreign countries. With this trend set to continue, Marcus believes that it is high time for policymakers and businesses to act quickly and ensure that people are not left behind.
Regulators are Proving Difficult to Work with
While the US financial system is struggling, Marcus claims that regulators are fighting the organizations trying to ease the situation. This approach has placed the U.S. in the backseat, allowing countries like China to spearhead financial innovation. He specifically pointed out that his leadership role at Facebook, during the two years that the company has been building the Novi Wallet, has seen him deal with regulators first-hand.
According to Marcus, the Novi Wallet has the potential to let users and small businesses transfer money domestically and internationally in a quick and affordable fashion. He added that the wallet is ready to enter the market as the project has already secured all the relevant licenses and approvals for nearly every U.S. state.
However, the wallet can only launch on Diem, formerly named Libra. This has proven to be a problem for the project because regulators have refused to budge, despite the Diem Association addressing each of the valid concerns. Marcus noted that the primary concern of many financial watchdogs is that Facebook is a member of the Diem Association.
Regulators Should Loosen Their Grip on Facebook
Defending Facebook, Marcus acknowledged that the company has had its flaws in the past. However, it now has a solution that can transform the global financial system. In explaining why he has so much faith in Facebook, he said that the firm has operated Facebook Payments since 2009. With the payment system recording a transaction volume of $100 billion in the last four quarters, Marcus believes it is very capable of taking part in the mainstream financial industry.
Marcus believes that Facebook deserves a fair chance because it can, and should, play a key role in improving the unacceptable state of affairs that has persisted for too many people for too long. Marcus further noted that, traditionally, the American way to do this has been by enabling more competition and innovation to break the stalemate of decades of stagnation.
Apart from fighting for Facebook, the executive emphasized that the U.S. dollar is facing challenges like never before. To this end, regulators should work with leading tech companies to come up with solutions that will help the U.S. economy win the war being waged against its interests.
On The Flipside
- While Facebook’s offering seems flawless, it is worth noting that the company suffered a data breach that saw the personal information of 553 million people published on a hacking forum. The company denied any wrongdoing and claimed the data was obtained from publicly available information on its site.
- If such an incident took place after Facebook received the green light to launch its Diem stablecoin, the scale of losses would be unprecedented in the crypto market.
Why You Should Care?
If the Diem Association gets the go-ahead to proceed with the development of the Diem network and stablecoin, the mass adoption of cryptocurrencies would quickly become a reality, seeing as Facebook has approximately 2.89 billion active monthly users.