The need to democratize foreign currency exchange
BlackRock’s Larry Fink emphasized that there is a huge need to democratize the exchange of foreign currencies in cross-border transactions and to bring down the fees of the interchange.
The financial executive pointed out the existing problem of overcharging cross-border transactions, claiming that people who need to send money worldwide usually do that through organizations that charge from five to ten percent.
To reduce interchange fees, the world doesn’t need Libra, but technology
However, the financial executive argued that the world does not need to create a new currency to do democratize global money transactions, suggesting that that should be reached by means of technology:
“I actually believe that the idea about Libra — I don’t think we need to create a new currency, but the technology to instantaneously calibrate all the currencies. That should be done.”
Fink elaborated that the global financial system does not need an international currency such as Libra to reduce the operating fees. Instead, he argued that incorporating a particular technological mechanism in each transaction would minimize the transaction cost. The executive said:
“You don’t need a Libra. You have computers that can monetize and calibrate euro to dollar instantaneously for a couple basis points.”
The news comes amid reports that Blackrock is setting up a working group to evaluate potential involvement in the Bitcoin (BTC) market, including investments in BTC futures. As the investment management is known for its critical stance towards cryptocurrencies, with Fink describing BTC as an index of money laundering in October 2017, two months before the cryptocurrency broke its all-time high of $20,000.