New York: With a user base of more than 2 billion people, Facebook has now announced the launch of a new cryptocurrency called ‘Libra’. The digital currency would be in the market by mid-2020. Also, the currency is believed to be supported by bank deposits and government securities. Nearly 28 companies, from the information technology sector, have collaborated for Facebook’s Libra cryptocurrency. These involve, PayPal, Mastercard, Visa, Vodafone, eBay and Uber, among others. While a currency war has erupted globally, Facebook’s announcement of Libra assumes much importance and could have a significant impact on the global economy.
Libra is designed to be easily convertible into the conventional currency. David Marcus, the project head for Libra, informed that performing transactions in the currency would be just as easy as sending an SMS. ‘As per the Roman culture, the word ‘Libra’ means justice, whereas, in French, it means freedom. Thus, Libra is a combination of money, justice and freedom, which is exactly what we’re trying to do here’, Markus claimed. Giants from the IT and finance sectors are partnering in the project, which is indicative of the extensive scope of the project even at the initial stage.
Currently, Facebook has nearly 2 million users worldwide, which could be potential users for Libra. At the same time, the participation of leading companies from the IT and finance sectors in the project Libra is speculated to cause the cryptocurrency to be used extensively. Therefore, Facebook believes that Libra would be on the trading lists in the currency market in the near future. What’s more, nearly 1.7 billion people around the world who don’t have bank accounts meaning they do not have access to traditional banking, would avail Libra.
Libra is expected to be unveiled to the world by mid-2020. With the announcement of Libra, at a time when the global economy is undergoing an upheaval, Facebook has drawn the attention of the world. Furthermore, a trade war is raging between the United States and China. The United States has accused China of deliberately manipulating its currency to keep the value of Yuan low whereby the mainland reaps additional trade benefits. On the other hand, China and Russia have accused the United States of using the US dollar, which is the global currency, as a weapon. Also, the exchange rates of many currencies are heavily disputed.
In the current scenario, the entry of Libra in global finance could pose a stiff challenge to the US dollar. The US Congress and Department of Justice have instituted an enquiry for malpractices and monopolies against leading companies, in the tech industry. Both, the US Congress and the US Department of Justice have begun contemplating new laws or bringing amendments to the existing ones, to restrict the unlimited freedom enjoyed by the companies, which also includes Facebook. Moreover, the US media asserts that the US move is a declaration of war by Trump’s Administration against IT companies.
Given the developments, Facebook’s announcement of the cryptocurrency Libra assumes a distinct significance.