This article brings up some great points about Facebook’s Libra that I have also been thinking about.
That since the underlying basket includes short term securities, that Libra is also a security, not a currency as FB describes it. It behaves more like a (stable) ETF, and so a transfer is a buy/sell transaction that should attract (minsicule) capital gains.
Using securities as a means of exchange is quite existing. My colleagues and I in the fin-tech space have often discussed idly how it would be useful to simply transfer mutual fund, ETF or stock units from one to another, P2P, instead of via an exchange. Transferring liquid fund units is as close to making fiat payments as possible – bypass the bank account altogether.
Perhaps this is what banks and the US Congress should be worried about. Not that Libra as a currency will supplant the dollar. It won’t be a unit of account since it’s backed by fiat instruments and measures is stability by such. But that it makes P2P buying and selling of securities possible, keeping large amounts of capital outside of the banking system.