As Mark Zuckerberg and Facebook want the Libra stablecoin to be a truly global digital currency, they hope to shore up support by backing it with global fiats. Fabio De Masi, a German member of parliament for the country’s Bundestag, wanted to better understand how the stablecoin would remain stable, so Facebook has let him know. The currency will be backed by several different fiat currencies from different parts of the world, but adds that there won’t be any support from China’s yuan.
German media outlet Der Spiegel reports on Facebook’s response to De Masi, explaining that it told the politician that the U.S. dollar and short-term U.S. government bonds will cover 50% of Libra’s value. The euro and euro-denominated bonds will account for 18% of the value, while the remainder will cover fiat and bonds from Japan (14% of the value), the U.K. (11%) and Singapore (7%).
The exclusion of the Chinese yuan might bolster support for the stablecoin, at least in some jurisdictions. China is said to be considering the launch of its own state-back digital currency and keeping it out of Libra’s basket could prove advantageous.
How advantageous isn’t easily ascertained. Several major countries have already spoken out against the Libra, with some planning on banning it completely. The U.S. has spearheaded an initiative to keep the stablecoin from reaching consumers’ wallets and Germany isn’t too far behind. The country said only a week ago that it was considering a move to completely block the currency.
The crux of the blow-back is global and well-earned. Facebook has never done a good job of protecting consumer data and has even been charged with facilitating its release for possible illicit activity. More than just a couple of breaches have resulted in the private data of millions of people being compromised and confidence in the company’s ability to maintain its Libra operations secure is weak.
Even De Masi is convinced that Facebook won’t be able to do a good job, explaining that “every citizen should have the right to keep an account with the central bank, which has been deprived of the banks’ money-creation and the data thugs like Facebook.”
France is also opposed to Libra being introduced. Without gaining a solid footing with world powers – notably, the U.S., Germany and France – Facebook will have no chance of introducing its stablecoin as initially intended. It probably should have explored the possibilities of its offering being able to survive on a global stage before initiating the project.
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