On 18 June 2019, Facebook, the world’s largest social network, announced a cryptocurrency called Libra which would be a stablecoin backed by a basket of currencies weighted towards the U.S. dollar. Libra will be managed by a the Libra Association, a Swiss-based nonprofit backed by Facebook and other founding members. Facebook’s subsidiary Calibra will oversee the virtual currency and the wallet that will house it. The wallet will be built into Facebook Messenger and WhatsApp.
The responses by sovereign governments have been fast and furious. Some (e.g. US, France and India) immediately called for a halt to its development.
Following the regulatory backlash, big names like Visa, Mastercard, Paypal, Stripe and eBay have withdrawn from the Libra Association. On 14 October 2019, 21 remaining members of the Libra Association signed the Libra Association charter, which governs the currency. In a 18 November 2019 blogpost, the Libra Association stated that “The Libra project will comply with applicable laws and will not launch until this is achieved”.
China’s Digital Yuan
China, which insists that digital currencies should only be issued by governments and central banks has accelerated its efforts to issue its own Central Bank Digital Currency (CBDC) — a project which has been five years in the making.
China’s National People’s Congress has passed a law that will allow the issuance of state-sanctioned cryptocurrency, which will be called the Digital Currency Electronic Payment (DCEP). The DCEP will be piloted in the cities of Shenzhen and Suzhou with the participation of state-owned enterprises — the“Big Four” commercial banks (the Industrial and Commercial Bank of China, Bank of China, China Construction Bank and the Agricultural Bank of China) — and three telcos, China Telecom, China Mobile and China Unicom.
Facebook’s Libra vs China’s DCEP
Here’re the key deets TABUL8TED!
Other Horses in the Race
Libra has certainly spawned much FOMO (fear of missing out) among central banks.
EU: The European Union (EU) for instance, announced in November 2019 that it is looking into issuing a digital Euro. French Central Bank governor Francois Villery de Glaha has also expressed hopes that France be the first country to issue a digital currency saying that they intend to “launch a call for projects (for private sector players) by the end of the first quarter of 2020”.
Sweden: On 14 December 2019, Sweden’s Central Bank announced that it will be pilot-testing the e-krona in a partnership with Accenture.