We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Published online by Cambridge University Press: 22 December 2023
In this chapter, we shall examine in detail the initial launch of Facebook's Libra on the world. It illustrates all the issues involved in attempting to provide an alternative to a fiat currency and the need for safeguards.
In June 2019, Mark Zuckerberg's White Paper introduced Libra to the world. The original proposals have subsequently been watered down considerably and this chapter will explore the reasons for that.1 Libra was intended to be a global stablecoin, tied to a basket of currencies, instead of being tied to just one fiat currency or asset. The plan was to back Libra with a collection of low volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks. For each Libra issued an equal value of such currency, or highly liquid government bonds would be placed on deposit with a reliable repository. But given the basket of currencies approach, it is inevitable that the value of the basket would fluctuate over time in response to developments in trade and their economies. Although Libra acknowledges that the value of the stablecoin fluctuates with the value of domestic or international trade currencies, it did not explain how the exchange rate would be calculated and made transparent to Libra holders. This is especially important for local currencies, where an increasing use of Libra could lead to another kind of “dollarization” of the currency, which in turn could lead to a depreciation of the local currency.
The governance of the Libra blockchain and Libra reserve is in the hands of the Libra Association, an independent, not-for-profit membership organization based in Geneva. The Association itself would include any entity that operates a validator node and holds a sufficient stake in Libra, the minimum being $10 million, which provides the investment entity with one vote but the same entity cannot present itself twice. Some of the founder members included Visa, Mastercard, Spotify, Paypal, Uber, Lyft and Vodafone, but Visa, Mastercard, Strip, eBay and Paypal since pulled out.
To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.
