Facebook’s planned launch of a native cryptocurrency – dubbed project Libra – has received intense scrutiny from economists and regulators over the past few months.
A recent US Senate hearing cited concerns about the project potentially destabilising global currencies like the US dollar, while criticism was also directed at Facebook’s decision to base the company in Switzerland as opposed to the US.
This morning, Libra’s co-creator David Marcus took to Twitter to debunk the concerns.
He wrote: “Recently there’s been a lot of talk about how Libra could threaten the sovereignty of Nations when it comes to money. I wanted to take the opportunity to debunk that notion.
“Libra is designed to be a better payment network and system running on top of existing currencies, and delivering meaningful value to consumers all around the world.
“Libra will be backed 1:1 by a basket of strong currencies. This means that for any unit of Libra to exist, there must be the equivalent value in its reserve. As such there’s no new money creation, which will strictly remain the province of sovereign Nations.”
Marcus went on to claim that Libra will be engaging with central banks, regulators, and lawmakers to ensure strong regulatory oversight is reached.
1/ About monetary sovereignty of Nations vs. Libra:
— David Marcus (@davidmarcus) September 16, 2019
“We also believe strong regulatory oversight preventing the Libra Association from deviating from its full 1:1 backing commitment is desirable,” he added.
“We will continue to engage with central banks, regulators, and lawmakers to ensure we address their concerns through Libra’s design and operations.
“Separately, I’m looking forward to the Libra Association taking on full leadership of the project soon after its charter has been ratified so I can focus on building Calibra.”
Bank of England governor Mark Carney recently made a series of interesting comments regarding Libra’s potential impact on the US dollar, stating that digital currency could “reduce the influence” and eventually “replace” the world’s reserve currency.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.