Social media giant Facebook is continuing its push towards the creation of its own cryptocurrency, Libra. The company is just one of many in a consortium that includes big names like PayPal and Mastercard which is seeking to use blockchain technology to create the Libra cryptocurrency. However, Facebook is the project’s unquestioned architect – and it is largely Facebook that is being asked to account for the plans in question. As regulators and lawmakers around the world have given Facebook’s plans a somewhat frosty reception, the company has pushed forwards nonetheless. This week, it met with global central bankers and investment bank JP Morgan to see if it could talk people round.
Facebook’s share price has risen by 40% so far, year to date
Source: Yahoo Finance
Facebook and JP Morgan met with global central bankers on Monday – the topic under discussion was new cryptocurrencies that were designed to maintain a stable value. Maintaining a stable value should, in theory, lead to digital currencies that are less prone to the kind of wild volatility we’ve seen with bitcoin. Stability would be sought through currency pegging. JP Morgan, for example, has its own cryptocurrency, which is pegged against the US dollar. One JPM Coin will always be worth one US dollar.
This approach to cryptocurrency is called “stablecoin”, and Monday’s meeting over it was called by a working group set up by the Group of Seven countries. It was chaired by the European Central Bank’s Benoit Coeure, who has previously said that the ECB needs to “step up” its thinking around government backed digital currencies. However, that doesn’t mean he’s looking to take it easy on the regulation of this technology. He reportedly told attendees at the meeting:
“As a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system. They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.”
Dominion holds Facebook, as well as a number of other members of the Libra Consortium, in its Global Trends Ecommerce Fund.
Author: Theo Leworthy