Facebook's plan to launch a new digital currency called Libra is arguably the most ambitious initiative to date in the much-hyped realm of crypto assets. But while there may be a case for an innovative global payments system, there are many hurdles that the social media giant and its collaborators in the project will need to negotiate before Libra can come into being. In a recent White Paper explaining the rationale for Libra and how it will work, Facebook and its partners announced that their mission is "to enable a simple global currency and financial infrastructure that empowers billions of people". The paper noted that there are some 1.7 billion people worldwide who are currently excluded from the formal financial system. Moreover, existing financial systems, which are dominated by banks, also entail high fees and charges as well as long delays for even low-value transactions.
As proposed by Facebook, Libra avoids some of the weaknesses of existing crypto assets like bitcoin: It will be a "stable value" asset as it will be backed by bank deposits and government securities in reputable currencies. It will be secure, being built on a blockchain platform, and be designed to process transactions rapidly. It will also be user-friendly; transferring money will be as easy as sending a text message. Moreover, Libra will be governed by an independent association comprising diverse members including reputable companies such as Visa, MasterCard and eBay, as well as non-profit organisations. It will also be firewalled from Facebook - meaning that transaction data will not be shared with the social media giant nor be used to target advertisements to Facebook users. While much of this sounds reassuring, global financial regulators are sceptical.