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Libra -Facebook’s cryptocurrency – didn’t really have a great start with harsh critical reviews since it was revealed in June. Countries like France and Germany have stated that they would block Libra altogether, as they believe that monetary power should not be declared by any kind of individual entity. But the company along with its partners- who since the launch have not been in the limelight- keep trudging on.
A few days ago, The Head of Calibra, David Marcus decided to use social media to break some preset notions and clear out some facts about Libra. He chose twitter to ridicule the idea that Libra endangers the monetary freedom of any nation.
The supported Fiat currencies
Last Friday, German outlet Der Spiegel published (via Reuters) that Libra would be supported by a group of currencies consisting of the Euro, U.S. dollar, British pound, Japan yen, and Singapore dollar. But, China’s yuan is absent from the present scenario.
If China’s Yuan had been involved, it could have helped to create a smooth path for the planned entry of the cryptocurrency in the United States. This discusses concerns of some U.S. diplomats who grieve that yuan is growing too powerful as a reserve currency.
Officials have increased concerns regarding the yuan’s growing growth as a substitute currency at such a time when commerce relationships between the two economic giants are so tense.
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What lies ahead of Libra?
Libra is based on a blockchain program which also has the same name and is a unique kind of money called a stable-coin. These are normally financed by assets in the real world and created in such a method that their importance remains stable contrasted to those assets. Particularly in the case of Libra, the stable-coin will be supported by fiat money and government bonds(short-term).
The analysis for Libra’s supporting currencies, which reportedly arises from a Facebook letter addressed to a German diplomat Fabio De Masi, states as follows:
50% U.S. dollar
14% Japanese yen
11% British pound
18% percent euro
7% Singapore dollar
The US dollar contributes 50 percent of all the currencies supporting Libra. Other contributors are the euro, yen, sterling and Singapore dollar- but they are minor contributors compared to the US Dollar.
Also Read: China’s Huawei Wooing the Tech World With 5G
Libra Reserve: Overview
The non-profit Swiss-based Libra Association, incorporating Facebook and 27 other members who planned to start and oversee the currency, refused to comment on this particular analysis of the “Libra Reserve”. But they stated that the reserve was supposed to be a supply of cash and extremely short-term government contract designated in US dollars, yen, euros, sterling, etc. In the meantime, Facebook has also remained adamant about its intention to completely agree with regulators’ requirements prior to the launch of Libra.
This news might relieve some diplomats, but it’s doubtful that it will fully convince European politicians especially those who are generally against the idea of Libra. But it cannot be denied that Libra is the most popular of the stable-coins as it possesses the potential to be more of a mainstream asset and less volatile than other cryptocurrencies like bitcoin.
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