MAS in talks with Facebook over its Libra cryptocurrency

Facebook revealed plans to launch a cryptocurrency, Libra, in one of the boldest efforts to bring digital currencies into the mainstream. PHOTO: REUTERS

Facebook's new Libra cryptocurrency could help to solve inefficiencies in cross-border payments, but the social media giant's initiative needs deeper study, Monetary Authority of Singapore (MAS) managing director Ravi Menon said yesterday.

Talks with Facebook have already begun, Mr Menon told reporters. "We have been following closely," he added. "We are carefully studying this new development."

Facebook last week revealed plans to launch a cryptocurrency in one of the boldest efforts to bring digital currencies into the mainstream.

A report in The Wall Street Journal said the social media giant is working with big names such as Mastercard, Uber and PayPal, among others.

One of Libra's early goals is to provide basic financial services to people around the world who lack bank accounts, and to save some of the US$25 billion (S$33.9 billion) lost by migrants every year through remittance fees, the report noted.

Mr Menon said: "Very often with these new developments, the key challenge is to figure out the nature of the beast." He noted that Libra presents "some significant potential benefits that have been described, which we are obviously interested in as a financial centre".

For example, Libra could help lift the business of "cross-border payments, which remains expensive, inefficient, sometimes risky", he said.

But serious concerns have also been raised about operations, Mr Menon added.

"We need to understand exactly how it is going to work, what are the economics behind it, what are the safety protections, and what are the privacy issues, and so on," he said.

Bitcoin jumped to an 18-month high on Wednesday as investors looked for safety in alternative investments amid geopolitical tension, and cheered prospects that Facebook's Libra token could push cryptocurrencies into the mainstream, Reuters reported.

The world's biggest cryptocurrency has surged in value since April, and on Wednesday hit US$13,666.02 on the Bitstamp exchange, the highest level since January last year.

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A version of this article appeared in the print edition of The Straits Times on June 28, 2019, with the headline MAS in talks with Facebook over its Libra cryptocurrency. Subscribe