Facebook’s cryptocurrency won’t help the poor access banks

Source: Mehrsa Baradaran, Washington Post (Paid Registration)

Financial technology companies and cryptocurrencies have been promising for almost a decade that technology is the answer to financial inclusion, but none have delivered.

Outsourcing important monetary policy decisions to any private company, but especially one as large and reckless as Facebook, carries huge risks. If Libra succeeds in dominating the payments system as it already has in so many other sectors, the Libra will be an independent form of currency, one not issued by the Treasury.

My personal favorite reform: retail point of contact operations such as a post office checking account. These would allow the unbanked or underbanked to have a simple checking account at their local post office, to get their paychecks cashed immediately and then to use whatever mobile app they prefer to send and receive money. Such simple policy changes could increase savings, ease access to funds, and help many individuals and communities cross the cash-digital divide.

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