first_img by Xiaomi Achieving Globalization Head of Calibra Responds to 4 Concerns Regarding Facebook’s LibraDiscussed by senators at Facebook’s Libra Senate hearing.ShareVideo Player is loading.Play VideoPauseMuteCurrent Time 0:00/Duration 4:21Loaded: 3.80%0:00Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -4:21 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenThis week, both the Senate Banking Committee and the House Financial Services Committee grilled Facebook’s David Marcus, head of the Libra cryptocurrency project. Lawmakers bluntly laid out a variety of doubts about the Libra proposal, including whether the system could prevent money laundering, and whether Facebook should be trusted to collect transaction data, given its shoddy history of handling user information.But perhaps the most high-stakes question on legislators’ minds was whether Libra might introduce a new kind of systemic financial risk. Though often derided for their speculation-fueled volatility, bitcoin and other cryptocurrencies are largely disconnected from the mainstream financial system, and represent a relatively tiny slice of global value. Libra, by contrast, is designed in a way that could make it very large, and very closely entwined with things like national currencies and even small local banks.If and when Libra gets up and running—Facebook has said it will launch in 2020—it would have a built-in base of nearly 2.5 billion Facebook users worldwide, or roughly one third of the entire global population. Facebook and Marcus have said that reaching unbanked people is a major goal for Libra, and pointed towards close integration between Libra and Facebook tools such as Messenger. The social network, then, plans to push hard to get its users to convert funds to Libra. Rep. Michael San Nicolas (D–Guam) yesterday speculated that Libra could easily attract $100 billion in deposits—about one tenth of the assets held by Goldman Sachs—and potentially much more.Funds converted into Libra by users would be placed into a “Libra Reserve” made up of conservative instruments like treasury bills and national currencies. The value of Libra will not be ‘pegged’ to any single currency, and will instead ‘float’ in a global market, much like most national currencies. David Marcus nonetheless described its structure as “1 to 1” backing, in the sense that the reserve funds will not be lent out, decreasing risk. But there’s no real guarantee the Libra Reserve would be stable in practice, especially when broader conditions get rough. The problem, according to numerous experts, boils down to this: What looks safe on paper can hide unpredictable risks.“We’re talking about finance, which is inherently fragile,” says Columbia Law School’s Katarina Pistor, “And subject to crisis, time and again.” Pistor studies the legal structure of financial systems, and testified before the Financial Services hearing Wednesday. She thinks the idea that Libra can be insulated from crisis is based on “very strong assumptions that probably will prove to be wrong.”The Libra bank runOne of those assumptions is simply that certain currencies are ‘safe.’ “In the last decade, we’ve seen even the Euro under very significant pressure,” points out Lars Seier Christensen, an experienced currency trader and founder of Saxo Bank, a Danish investment bank.Even without the risk of lending out its reserves, Pistor says she “would not exclude the possibility of a run on the Libra,” as one slumping currency in its ‘basket’ could trigger a collapse of faith, causing holders to scramble for the exits. Because its value would float in the market, a sudden global rush to sell Libra would potentially mean a big (if temporary) hit for holders slow to exit. It doesn’t take much to trigger such a run: Pistor points out that the Reserve Primary Fund, a ‘safe’ money market fund, had less than 2% of its assets in Lehman Brothers when Lehman collapsed in 2008. Yet it caused a run, ultimately forcing Reserve Primary into liquidation.Libra’s possibly huge size would make it a threat to more than just its own holders. “Let’s say one of these [Libra Reserve] assets began to fail, for whatever reason,” Christensen says. “Presumably, if people began to reclaim the counter value of the Libra, [the Reserve] would actually have to start wholesaling the other assets for the shortfall in the original failing asset.” A large enough selloff, even of national currencies and short-term government bonds, could be a shock to the broader market.A scenario along these lines seemed to be on the minds of House Financial Services Committee members on Wednesday. Rep. Gregory Meeks (D-N.Y.), for instance, recalled the “absolutely terrifying” unfolding of the 2008 financial crisis, and argued that if even 10 percent of Facebook users began using Libra, “that would absolutely make [Libra] a systemically risky financial institution, and we would expect FSOC [the Financial Services Oversight Council] to designate you as such,” subjecting Libra to heightened ongoing scrutiny by regulators.The moral hazard of the Libra ReserveThese risks are compounded by one of the most worrisome elements of Libra’s proposed structure. Even many conservative instruments that might be included in the Libra Reserve return a percent or two of interest. Those returns, according to the Libra proposal, would not go to depositors, but to Libra Association members and other investors in the system. Despite the notional pledge that the Reserve will only hold the most conservative instruments, Christiansen finds this structure deeply problematic.“If all of the interest value falls to the consortium,” he muses,“Would there not be a slight temptation to go just a little bit higher on risk than you might if you didn’t have an upside? Would not the incentive be to move the yield from 100 [basis points] to 150 or 175?” That troubling dynamic collides with a hard truth: “Safe assets are not infinitely available,” says Pistor. “You could argue even today we have a scarcity of safe assets.” So even if not out of greed, the administrators of the Libra Reserve could find themselves extending into less safe territory as the currency grew. This again has shades of the 2008 financial crisis, when heightened demand for mortgage-backed securities led to increasingly dicey loans being bundled into them.Disrupting global monetary policiesOn July 11, U.S. President Donald Trump commented about virtual currency, including Libra, on Twitter. “We have only one real currency in the USA,” he said in part. Libra is clearly anticipating this sort of anxiety, with Marcus taking pains in his Banking Committee testimony to say that “The Libra Association . . . has no intention of competing with any sovereign currencies or entering the monetary policy arena.”But Libra’s very structure and mission may inevitably disrupt government monetary policy, says Pistor—especially in countries with less stable currencies. When Libra is sold by a local agent in a country like Kenya, for instance, the Kenyan shillings traded for Libra would in turn have to be traded in for something acceptable to the Libra reserve. “This could have an effect on the exchange rates of local currencies, and their stability,” says Pistor.Further, the conversion of local currencies for Libra could interfere with local banks’ ability to provide credit, for instance to local small businesses. Pistor says even cryptocurrencies that make no claim to stability—for instance, bitcoin—have seen significant uptake in places with weak money, making these impacts entirely plausible.Also… It’s FacebookOne of the most striking takeaways from this week’s hearings was how little credence legislators gave to Facebook’s claims that it would not control Libra once it launches. For instance, Facebook has gathered a consortium, including the likes of Visa and Uber, that would, in theory, come to oversee Libra through a Swiss-headquartered nonprofit. But as Rep. Anthony Gonzalez (R-Ohio) pointed out, the fact that Facebook is the one who gathered those parties could give the social network outsized power.Facebook’s role clearly has legislators particularly suspicious of Libra’s general trustworthiness. So much so, in fact, that they’re already preparing to block it outright. The Finance Committee has posted a discussion draft of a bill, referred to as the “Keep Big Tech Out of Finance Act,” that would explicitly make it illegal for “a large platform utility” (read: Facebook or Google) to “establish, maintain, or operate a digital asset” (read: Libra). Such a sweeping prohibition seems unlikely to gain traction, but the fact that it has even been proposed shows just how much Libra worries the people in charge.More must-read stories from Fortune:—Meet the A.I. landlord that’s building a single-family-home empire—You might have longer than you think to invest for retirement—Will the Fed cut interest rates to prevent recession? 6 predictions—Schwab’s ‘Project Bear’ uses A.I. to predict when investors are getting nervous—When the next recession hits, four good things could happenDon’t miss the daily Term Sheet, Fortune’s newsletter on deals and dealmakers.You May Like Sponsored Content HealthFormer GE CEO Jeff Immelt: To Combat Costs, CEOs Should Run Health Care Like a BusinessHealthFor Edie Falco, an ‘Attitude of Gratitude’ After Surviving Breast CancerLeadershipGhosn Back, Tesla Drop, Boeing Report: CEO Daily for April 4, 2019AutosElon Musk’s Plan to Boost Tesla Sales Is Dealt a SetbackMPWJoe Biden, Netflix Pregnancy Lawsuit, Lesley McSpadden: Broadsheet April 4last_img read more

first_imgWhen people think of forerunners in the tech industry, it’s often men who come to mind. But the fact is that leading entrepreneurs in the field are increasingly female, and not only are they making huge profits, they’re also changing the landscape of the tech world as we know it.As a recent article in the Harvard Business Review pointed out, we’re currently in the midst of the rise of female entrepreneurs around the globe. More and more women are leaning in and creating their own companies, even in the notoriously male-dominated tech industry. In an article OpenView published last week, .406 Ventures founding partner Maria Cirino noted there is still a lot of ground to cover to bridge the gap, but the five women below serve as inspiring and successful examples for anyone thinking of diving in and starting their own business.5 Female Tech Entrepreneurs to Watch1) Julia Hartz: Co-founder and President, EventBriteEventBrite is an organization that allows anyone to sell virtual tickets for a variety of different events. Whether it’s a fundraising fashion show or a concert that’s been sold out for weeks, EventBrite users can create a customized event page, promote it via social media, and collect their profits online. Hartz has become famous for giving EventBrite a warm and familial company feel, while also skyrocketing profits to $600 million in 2012.Quote: Sometimes I feel like I’m standing with a pitchfork on the porch and saying, “Goodbye, destructive egos. Goodbye, backstabbing. Goodbye, policies.” That stuff won’t work here.2) Kathy Mills, CEO, Strategic CommunicationsStrategic Communications provides business and government clients with communication and IT services. By 2012, its gross revenues skyrocketed to $42 million. Its services include PBX Telephone and Voicemail Systems, Video-Conferencing Solutions, and Infrastructure Wiring.Quote: My husband and I were the first in my family to start a company… in 1984, after the Commodore 64 came out… We sold everything we had and opened one of the first computer stores in Louisville. In 1992, we sold that business, and I opened Strategic Communications two years later.3) Kate Matsudaira, Founder and CTO, popformsPopforms helps companies with limited budgets “develop and grow” their employees. By providing tools that help staff grow as leaders, Matsudaira believes that teams will flourish. Before popforms, Matsudaira managed teams at Amazon and Microsoft, as well as growing companies like Moz and Decide (now part of eBay). She also is the creator of a popular blog, katemats.com.  4)  Ranjini Poddar, Co-Founder and President, Artech Information Systems LLC Not only is Artech a unique tech company because it is run by a woman, it is also the largest women-owned IT staffing company in the U.S. That’s not to underplay, of course, the fact that it also makes nearly $400 million per year.5)  Tiffany Crenshaw, President and CEO, Intellect Resources Intellect Resources provides consulting, recruiting and hiring solutions for businesses in the health-care IT market. Its gross revenues climbed from $1.5 million in 2010 to $30 million last year. To boot, Intellect Resources placed fourth on the Forbes list of the 50 fastest growing women led companies.Quick Fact: Tiffany is a finalist for the 2013 Ernst & Young Entrepreneur of the Year Award.We Want to Hear from YouThis is obviously a small list. Who are some of the other women driving growth and innovation in tech? Photo by Tech CocktailAddThis Sharing ButtonsShare to FacebookFacebookShare to TwitterTwitterShare to PrintPrintShare to EmailEmailShare to MoreAddThislast_img read more