Facebook has announced a crypto-currency to be launched next year called Libra.
It will be managed by founder members of the Libra Association of which there are now 28 members but they want to increase to 100. Each member, including Facebook, has one vote on governance issues.
Unlike JP Morgan’s recently launched crypto-currency, the Libra’s value is not linked to any other currency.
Instead, says Facebook, ‘the value of a Libra is meant to stay largely stable so it’s a good medium of exchange since merchants can be confident they won’t be paid a Libra today that’s then worth less tomorrow. The Libra’s value is tied to a basket of bank deposits and short-term government securities for a slew of historically stable international currencies including the dollar, pound, euro, swiss franc, and yen. The Libra Association maintains this basket of assets and can change the balance of its composition if necessary to offset major price fluctuations in any one foreign currency so that the value of a Libra stays consistent.’
The justification for the Libra is that it will allow un-banked people, and people making tiny payments, to engage in worldwide financial transactions with minimal cost.