The buzz around Facebook’s Libra stablecoin is gone off through the roof, as some might say. The truth is that the cryptocurrency project undertaken by Facebook has shaken regulatory bodies around the world so “violently” that they cannot simply decide if Libra is a huge opportunity or huge threat.
However, there are certain details around Libra that are worth mentioning at this point. As reported by Bloomberg, Libra is currently backed up by multiple national currencies such as the Euro, British pound and the US Dollar. Facebook released its preliminary report to the US Senate regarding the actual basket of fiat currencies that back Libra – one name on this list, however, was nowhere to be seen – that of the Chinese Yuan.
While this may seem surprising, the reason for that is indeed logical. Following the requests from Mark Warner, a Virginia Democratic Senator, for the Libra Association to exclude the Yuan in the potential currency backers for the coin, it became clear that the reason for the decision is that China has recently been asking international banks around the globe to increase their Yuan reserves given the ongoing trade wars with the US.
The interesting part is that due to the massiveness of the project, Facebook will not be the one to decide on the basket of currency backers. This will be delegated to the Libra Association.
This is what part of the report submitted by Facebook read:
We understand that the Libra Association will not offer the Libra digital currency in any jurisdiction until it has fully addressed regulatory concerns and received appropriate approvals in that jurisdiction.
In addition, China is also rumoured to be launching its own digital coin, an action that may have serious repercussions over Facebook’s Libra “power game”.