Even though a number of financial regulators across the world have given a cold shoulder to the social media company Facebook’s planned launch of a cryptocurrency, it said that it would push ahead with the planned launch next year. This was confirmed by an executive incharge of overseeing the project to the Swiss newspaper NZZ.
There have been regulatory and political skepticism against the proposed cryptocurrency ever since Facebook came out and announced in June about its plans for the launch. The governments of France and Germany have said that they would not allow the launch of the digital currency Libra in Europe.
“The goal is still to launch Libra next year,” Facebook’s David Marcus told NZZ in an interview published on Friday. “Until then, we’ll need to address all questions adequately, create a suitable regulatory environment.”
Analysts view the efforts of Facebook to launch its own cryptocurrency as its way of bringing digital currencies into the mainstream even as the company slowly is expanding into e-commerce.
A reserve of real-world assets will be used a backup for the Libra which would include bank deposits and short-term government securities. The entire operations would be managed by a 28-member organization called the Libra Association.
The measures and the designing of the digital currency, according to Facebook, is aimed at increasing trust in it as well as stabilizing its price by reducing volatility which is one of the major deficiencies of other cryptocurrencies and therefore has become practically impossible to use commerce and payments.
Libra becoming an actual mode of payment in the real world and especially in countries like Switzerland, Germany or France is highly unlikely, Marcus said, and added that it is likely that the Libra would become a tool for making cross-border payments or for settling very small sums.
“It’s unlikely in any case the people will pay for an espresso in Switzerland, Germany or France with Libra in the future,” he said. Initially, he added, he expected user acceptance to be a bigger problem than regulatory issues.
The potential of the proposed Facebook’s crypto currency becoming a tool for destabilization of the global financial system is among the most important concerns about it for regulators and authorities. Additionally, they are also concerned about the Libra interfering with sovereign monetary policy, impinging privacy and the possibility of it being used for money laundering.
But Marcus differed with these concerns arguing that since the Libra project would not be creating any new money and would not tussle with or impact interest rates or yields, therefore it would in no way be possible or Libra to interfere with monetary policy.
Marcus said, all the places where the company would be able to get regulatory clearance and meet regulatory requirements, its Calibra digital wallet would be made available. This wallet will allow consumers and vendors to hold and transact the digital currency.
He added that it would not be possible for Facebook to access data from the newly created subsidiary Calibra.
(Adapted from Reuters.com)