On 18th June 2019, Facebook announced that it will launch a new digital currency, called Libra. It is likely to be launched as early as next year with users being able to make digital payments via apps such as Facebook, Messenger and WhatsApp.
Facebook is the latest tech company to step into the payment sector, following Apple Pay, Samsung Pay and Google Pay. Facebook's unique selling point, however, is that Libra uses crypto-currency.
How will Libra, Facebook's digital currency, work?
Facebook has confirmed that Libra will be backed by real assets. One of the concerns of crypto-currency is that it is usually just a digital asset, meaning that the price is highly volatile. With Facebook confirming that Libra will be backed by real assets (usually in the form of other currencies such as the US dollar or precious metals such as Silver or Gold) then the currency should be more stable.
Facebook confirmed that paying using Libra would be as easy as texting and would be independently managed by a group of companies and charities (Facebook being just one) - known as the 'Libra Association'.
What companies will accept Facebook's digital currency Libra?
It is too early to know exactly who will accept Facebook's new digital currency, but it is likely that Libra payments will eventually be accepted by all of the companies and charities within the Libra Association. That includes:
- Vodafone and other telecoms companies
Facebook said that it expected Libra to be bought and sold on currency markets in the future.
Is Facebook's new digital currency Libra safe?
Facebook hopes to keep the currency stable (and prevent the wild swings that we have seen in other crypto-currency such as Bitcoin) by pegging the currency to a basket of well-known currencies, including the euro, the pound and US dollar.
The full details of how payments are processed, the security of such payments and exactly what consumer rights are available to Libra users have yet to be released.
Facebook has said however that the apps and services that use Libra will need to be compliant with the regulatory regimes in the markets that they operate within.
Who is Facebook's new digital currency Libra aimed at?
Facebook says that there are 1.7 billion adults worldwide who do not have a bank account and so a digital currency could benefit those that are disproportionately affected, such as those in developing countries.
The US has already approved the currency for launch, however it is unclear whether countries such as India (undoubtedly one of Facebook's intended target market's) will be as keen to approve the launch, especially as they have recently clamped down on other digital currencies.
Facebook has been recently engaging with governments, regulators and central banks in order to build trust in the digital currency and it has been reported that around 12 markets would be ready upon launch.
We will update this article as more information becomes available.