Opinion | Cryptocurrencies could constrain a country’s choices

Some weeks ago, there was news of Facebook launching a cryptocurrency called Libra, designed to appeal to its global user base of over 2 billion. Unlike Bitcoin, which is a roller coaster, Libra will be backed by a basket of fiat currencies. It is supported by a consortium of large-scale corporate houses, financial services firms and venture capitalists. Net-savvy millennials have little patience for expensive traditional banking methods for cash transactions. They would likely flock to alternatives like Libra. Other Big Tech companies like Google and Amazon are unlikely to stay on the sidelines. At the time, I wrote in this column that governments worry about their sovereign currencies and will eventually regulate Big Tech cryptocurrencies. Governments not only manage their exchange rates and liquidity, they must try to restrict money laundering and terror financing.

I apologize for the heavy reading that is about to ensue. I have simplified some of the concepts here, but as Einstein once said of science: “Everything should be made as simple as possible, but no simpler.”