FACEBOOK HAS REVEALED plans for a new global cryptocurrency know as Libra which will come into use as early as next year. 

The Libra coin plan, backed by financial and non-profit partners, is a new initiative for the world’s biggest social network site.

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 roll out as global digital money next year.

The non-profit Libra Association, based in Geneva, will oversee the blockchain-based coin, maintaining a real-world asset reserve to keep its value stable.

The initiative has the potential to allow more than a billion “unbanked” people around the world access online commerce and financial services at minimal cost, said Libra Association head of policy and communications, Dante Disparte.

“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,” he said. 

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 said. 

“Many people who use Facebook are in countries where there are barriers to banking or credit,” he added. 

It has sparked concerns about how the new digital currencies would be properly regulated. 

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.

Libra Association debuted with 28 members including Mastercard, Visa, Stripe, Kiva, PayPal, Lyft, Uber and Women’s World Banking.

Calibra is being built into Facebook’s Messenger and WhatsApp with a goal of letting users send Libra as easily as they might fire off a text message.

Libra learned from the many other cryptocurrencies that have preceded it such as bitcoin, and is designed to avoid the roller-coaster valuations that have attracted speculation and caused ruin.

Real-world currency will go into a reserve backing the digital money, the value of which will mirror stable currencies such as the US dollar and the euro, according to its creators.

“It is backed by a reserve of assets that ensures utility and low volatility,” Tomer said.

The Libra Association will be the only entity able to “mint or burn” the digital currency, maintaining supply in tune with demand and assets in reserve, according to Barel.

“It is not about trusting Facebook, it is effectively trust in the association’s founding organizations that this is independent and democratic,” Disparte said.

Facebook said it will not make any money through Libra or Calibra but that it is seeking to “drive adoption and scale” before exploring ways to monetize the new system.

Financial information at Calibra will be kept strictly separate from social data at Facebook and won’t be used to target ads, Calibra vice president of product Kevin Weil said.

© – AFP 2019