Facebook's currency could disturb the stability of the financial system
Wall Street’s magnates have worried that Silicon Valley’s giants will shake up finance. Facebook thinks it has found a way. It will launch a digital currency, the Libra, in 2020. Mark Zuckerberg’s firm has failed before to popularise a payments service. And it is an unlikely guardian of other peoples’ money, given its habit of privacy abuses and evasion. But like or loathe the company, its new scheme has legs.
Libra is designed to avoid these pitfalls. It will be fully backed by a reserve fund which holds mainly government bonds, limiting its volatility. The currency will be administered by an independent body that will oversee a centralised database with an anonymised record of transactions. The system will be open, so that any firm is free to create digital wallets that allow customers to use Libras. Uber, Vodafone and Spotify are among the big firms that are keen to be anchor members.
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