Facebook’s recently unveiled cryptocurrency Libra faces some major challenges in light of its main investors planning on withdrawing (or, at least taking cautious steps) from the project. According to PayPal’s investor relations vice president Gabrielle Rabinovitch, they’re excited about this project, but the excitement doesn’t extend to being a viable possibility as of yet.
What’s Libra and who supports it
The idea of Facebook’s own cryptocurrency was born in mid-2018, but for its tumultuous year with numerous scandals, the news went on to be generally unnoticed. The main event for Libra was its official unveiling in June 2019.
The basic idea behind Libra is to serve those who have been widely “unbanked”, which comprises of those who get their money in cash. According to the Business Insider, almost 2 billion people don’t have a bank account and use cash for financial purposes and almost all of them come from developing countries. Rabinovitch also emphasizes the importance of such a currency, claiming to be “serving the underserved” and “democratizing access to capital”.
Libra Association is an independent organization, which consists of 28 founding members – including PayPal, Visa, Mastercard, and Spotify – who have made a minimum investment of $10 million to join the project. However, some experts at BestSocialTrading claim that in light of mounting regulatory and political pressures some members would withdraw their support of the Libra project.
Governments are not happy about Libra
Even though expanding currency markets and reaching billions of “underserved” customers seems like a wonderful idea, it certainly undermines the governments’ monopolies on the money supply and currency market. Claiming that the “monetary sovereignty of states is at stake”, French finance minister Bruno Le Maire declared that they’ll do anything to stop Libra from emerging on European soil.
Similar concerns have been voiced by German parliamentarians, who are against authorizing Libra in the EU. They plan on challenging it with their own, state-supported “public digital currency”, which shows just how much the virtual currency has taken the field of the global financial environment.
Giorgi is a news reporter and financial analyst at www.forexnewsnow.com He has 3 years of experience in analyzing the financial markets of Forex and cryptocurrencies. He also likes making hidden jokes in his articles.