Published: Thu, June 20, 2019
Markets | By Otis Pena

Facebook to launch global ‘Libra’ cryptocurrency

Facebook to launch global ‘Libra’ cryptocurrency

Facebook announced that is has been developing Calibra, a digital wallet for the currency.

The Libra Association, which effectively acts as a governing body for Facebook's cryptocurrency, also counts financial institutions and payment providers like Visa, Mastercard, Paypal and Stripe as well as companies like Uber, Lyft and Ebay among its members. Facebook is now under federal investigation over its privacy practices, and along with other technology giants also faces a new antitrust probe in Congress.

Facebook Inc's plans to create a global cryptocurrency will face scrutiny from the U.S. Senate Banking Committee on July 16, the latest sign that policymakers around the globe are casting a wary eye on the project. "It is out of question" that Libra "become a sovereign currency", Le Maire said in an interview with Europe 1 radio, per Bloomberg. Libra will look to turn cryptocurrency into the new mainstream way of shopping and spending money.

Industry group Payments New Zealand declined to make any comment on the Libra idea.

Apart from the concerns of the impact crypto economy on the financial stability of the country, many politicians are also pointing out Facebook's troubled past with data privacy.

The Libra's publicly stated goal "is to enable a simple global currency and financial infrastructure that empowers billions of people" and claims to be built on "a secure, scalable, and reliable blockchain", according to its white paper.

Senator Sherrod Brown (D-OH) also plans to sick government watchdogs on Facebook, citing that they are "already too big and too powerful, and it has used that power to exploit users' data without protecting their privacy".

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She cited the firm's history of controversies involving user-data among her concerns, and called on Facebook's executives to testify before her committee.

"It can not and must not become a sovereign currency, with all the attributes of a currency", such as the capacity to issue sovereign debt and serve as a reserve currency, said the French finance minister.

Libra is an forthcoming digital currency accessible through apps to pay for things or to send money to each other, meaning Libra is similar PayPal.

Volatility issues: While Facebook says the association members will contribute funds to back the currency and keep it at a stable price, their ability to do so is yet unproven. As a result, it is possible that a regulatory organ could take action to stop Facebook's crypto project. Calibra will be a subsidiary of Facebook, while Libra will be governed by the Libra Association, an organization comprised of a number of different companies (including Facebook and Calibra) that's headquartered in Geneva, Switzerland. "The wallet will be available in Messenger, WhatsApp and as a stand-alone app", said Shaarik Zafar, public policy manager at Facebook.

According to Facebook and its partners, local currencies and Libra may be swapped at currency exchange houses or other businesses. Ultimately, the company aims for its digital currency to replace regular money for a wide variety of use cases. And for now Calibra's just building a wallet to handle those transactions.

Libra's blockchain presently exists as an open-source prototype called Libra Core.

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