The long wait for the Facebook currency
After the Calibra Foundation and Facebook CEO Mark Zuckerberg published their plans for a new digital currency last year, the hype could hardly have been greater. But it wasn’t long before the project encountered enormous headwinds. Central banks and renowned celebrities voiced concerns. Libra came under pressure. Let’s take a look at the latest developments.
What has happened so far
To recall the project again, let us briefly summarize: In the almost 100-page white paper, which was signed by over 50 block chain experts, the problems of the FIAT currencies are addressed first. According to the paper, over 1.7 billion people worldwide do not have access to a bank account and international transactions are often overpriced. Furthermore, according to the white paper, traditional crypto currencies such as Bitcoin and Ethereum are also not effective due to scaling problems and high volatility.
Libra as a solution
Libra aims to remedy the problems mentioned above. For this purpose, Libra Coin is to be marketed as a stable coin. Stable coins have the property that their value does not fluctuate. Thus, a global world currency is created that overrides exchange rates. The Libra Coin is to be covered 1:1 by the deposit of different currencies. As soon as the user pays the price for a Libra Coin, it is created. For the storage of the currency, Libra is planning various wallets, including the “Libra Wallet”, which will also be accessible via Facebook and Whatsapp.
After the plans were published, criticism from several sides hailed. For example, Benoit Coeure, for his part a member of the ECB’s Executive Board, spoke out in favour of tough regulatory approaches to Stablecoins. Prior to this, criticism from data protection commissioners in Australia, the US, the UK and the EU came in for the project. Again and again, Libra Coin was at the centre of the discussions. Subsequently, Libra often reacted defensively and announced revisions and close cooperation with governments.
In the course of the coronavirus pandemic, things became quiet around Libra. However, Libra supporters probably registered with enthusiasm that former Libra Managing Director & COO Bertrand Perez announced “a strong response” to the demands of the “supervisors”. David Marcus, co-creator of Libra, also explained that Libra does not want to create new money, as this will remain the task of nations. He said the Libra project would be carried out in close cooperation with “central banks, regulators and legislators”. This is to ensure that “all concerns are dealt with effectively”. According to the report, there is hope that Libra will be published this year.
What does the “new Libra” look like?
Anyone planning the largest currency project in recent history is likely to have had to reckon with headwinds in advance. Countless users are asking themselves what the new Libra version might look like. How far is Libra meeting with the critics? Is there one Libra dollar and one Libra euro? One thing is certain: after market leaders such as PayPal and Visa have jumped off the project, it will have to convince the supervisory authorities at the second attempt. Whether the project will really appear this year, however, remains at least questionable.