Facebook unveiled plans Tuesday for a new global cryptocurrency called Libra, pledging to deliver a stable virtual money that lives on smartphones and could bring over a billion “unbanked” people into the financial system.
The Libra coin plan, backed by financial and nonprofit partners, represents an ambitious new initiative for the world’s biggest social network with the potential to bring crypto-money out of the shadows and into the mainstream.
Facebook and some two dozen partners released a prototype of Libra as an open source code for developers interested in weaving it into apps, services or businesses ahead of a rollout as global digital money next year.
The nonprofit Libra Association based in Geneva will oversee the blockchain-based coin, maintaining a real-world asset reserve to keep its value stable.
The association’s Dante Disparte said it could offer online commerce and financial services at minimal cost to more than a billion “unbanked” people — adults without bank accounts or those who use services outside the banking system such as payday loans to make ends meet.
“We believe if you give people access to money and opportunity at the lowest cost, the way the internet itself did in the past with information, you can create a lot more stability than we have had up until now,” Disparte, head of policy and communications, told AFP.
Facebook will be just one voice among many in the association, but is separately building a digital wallet called Calibra.
“We view this as a complement to Facebook’s mission to connect people wherever they are; that includes allowing them to exchange value,” Calibra vice president of operations Tomer Barel told AFP.
“Many people who use Facebook are in countries where there are barriers to banking or credit.”
But the move raised questions about how such a new money would be regulated, with one lawmaker calling for a pause on Libra.
“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues,” said Maxine Waters, chair of the financial services committee in the US House of Representatives.
Meanwhile French Finance Minister Bruno Le Maire said such digital money could never replace sovereign currencies.
“The aspect of sovereignty must stay in the hands of states and not private companies which respond to private interests,” Le Maire told Europe 1 radio.
Bank of England Governor Mark Carney said Facebook’s new currency would have to withstand scrutiny of its operational resilience and not allow itself to be used for money laundering or terror financing.
ING economists Teunis Brosens and Carlo Cocuzzo said in a research note it was not clear what Libra was or how it might be overseen while US Senator Sherrod Brown, a Democrat and banking committee member, voiced concerns over Facebook’s checkered record on protecting users’ privacy.