When Libra sent its top representative, David Marcus, in front of U.S. lawmakers in July, one question that was put to the Calibra executive was which fiat currencies would back the new digital offering. While Marcus was vague at the time, answers have now been provided, care of a letter from Facebook.
Bloomberg reports that in a letter addressed to the Senate, Facebook specifically listed the “basket of currencies” that will back the Libra. They include: The U.S. dollar, Euro, Yen, British Pound and Singaporean dollar.
This letter comes as a response to Virginia Democratic Senator Mark Warner, who in asked which currencies would back the Libra, and if the Chinese Yuan would be one of them. The exclusion of the Yuan from this list makes a lot of sense, both because of the ongoing U.S. and China trade war, but also in that including the Yuan would be unlikely to gain much favor in China, where Facebook is not currently offered.
Explaining the process for adding new currencies to the Libra’s basket, Facebook wrote:
“Any decision whether to add a new currency to the Libra Reserve would be made based on all the facts and circumstances at the time, including any direct or indirect regulatory restrictions.”
The chosen currencies make sense to a large degree, as they are all fairly stable themselves and, especially in the case of the U.S. dollar, used as a reserve currency all over the world. They aren’t guaranteed to stay that way though, as any currency can suddenly experience hyperinflation, as the British Pound could if Brexit goes horribly wrong.
To further appeal to the U.S. lawmakers, Libra also recommitted to not launching the Libra in territories that haven’t approved it. “We understand that the Libra Association will not offer the Libra digital currency in any jurisdiction until it has fully addressed regulatory concerns and received appropriate approvals in that jurisdiction,” the company wrote.
The big question is if Libra will ever launch. The Libra Association has been rumored to have internal discent over the botched roll out of the new crypto, and they have publically admitted that there’s some possibility Libra will never launch.
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